The PMI welcomes the Government’s Final Report on the Pension Investment Review. The PMI acknowledges that larger default funds may lead to better outcomes either through greater economies of scale or just being large enough to take advantage of the investment opportunities that require greater scale.
The PMI welcomes the clarity around the approach to addressing fragmentation. There is a particular urgency to get older contract-based schemes sorted quickly, and the PMI looks forward to seeing the details in the forthcoming Pension Schemes Bill.
It’s also interesting to see the Government including a reserve power to set binding asset allocation targets and again we look forward to seeing the details of this in the Pension Schemes Bill.
Tim Box, Chair, PMI Policy and Public Affairs Working Group, said: “Whether greater scale means that investments would actually be directed into the UK remains to be seen. For those running UK pension schemes the ultimate responsibility is to act in the best interests of members. Pension funds will invest where opportunities align with long-term value and security. We look forward to seeing details of how the reserve power to set binding asset targets will work and the impact this will have on decision making.
Box went on to say: “The ambition in these proposals is large and the overall proposed timescales relatively short given the size of changes proposed. Beyond investment choices, practical implementation must be considered. Industry bandwidth to support consolidation and reform is finite, and sequencing matters.
“Rushing change risks confusing savers and undermining confidence in the system. Any reforms must be structured to ensure clarity, stability, and a smooth transition for members.”