The Chancellor has announced significant private and public sector pension reforms in his Autumn Statement, as part of the Government’s strategy to consolidate the pensions market, and deliver fewer, larger, defined contribution pension schemes, together with collective defined contribution (CDC) schemes which will offer "more predictability of income in retirement"

In the Autumn Statement today Jeremy Hunt said:

  • The government will consult on giving pension savers a "legal right to require a new employer to pay pension contributions into their existing pension". This is being carried forwards by the government launching a call for evidence on a lifetime provider model to simplify the pensions market, and allow individuals to move towards having one pension pot for life.

    Some industry experts have raised concerns over the potential impact on both employers and employees.
  • The government will also introduce a “multiple default consolidator” model to enable a small number of authorised pension schemes to act as a consolidator for eligible pension pots under £1,000. 
  • The government is updating reviews on the value for money framework, master trusts, decumulation, Solvency II reform, trustee skills, surplus extraction, long-term pension investment performance, LGPS investment reform and the Long-term Investment for Technology and Science initiative.
  • There will be a consultation on defined benefit (DB) surplus repayment rules to facilitate pension funds investing in a more diverse portfolio, and to incentivise investment by well-funded schemes in assets with higher returns, in order to build and run a surplus.

    The Treasury also plans on reducing the authorised surplus payments charge from 35% to 25% from 6 April 2024.
  • Further details have emerged on plans to encourage greater investment in productive finance in line with the “Mansion House” reforms, including plans to consolidate the industry and open the Pension Protection Fund (PPF) as an investment vehicle for smaller defined benefit pension schemes.

    There is also an intention to encourage defined benefit to invest in productive finance "through a legislative framework for DB superfunds and new consolidation vehicles"
  • Local Government pension scheme: The government has confirmed that it will introduce a March 2025 deadline for the accelerated consolidation of LGPS (England and Wales) assets, as well as new private equity investment requirements, setting a direction towards fewer pools exceeding £50bn assets under management, and implementing a 10 per cent allocation ambition for investments in private equity.

    The government previously launched a consultation on new targets for LGPS funds to double their existing investments in private equity to 10 per cent, in a move that is expected to help unlock £25bn by 2030.

How Capsticks can help

Capsticks has significant experience supporting employers on a wide variety of pension issues. We’ll keep you updated on the above as they progress or further information is released.

If you have any questions around what is discussed in this insight, please contact Neil Bhan.