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An update from our Parlimentary Advisors
The Ministry of Housing, Communities and Local Government has launched a consultation regarding proposed reforms to the Local Government Pension Scheme (LGPS). The purpose of this consultation is to gather feedback on measures aimed at enhancing the structure, investment strategies, and governance of the scheme.
Key Focus Areas:
- Asset Pooling: Proposals to refine the existing framework for pooling pension fund assets to improve cost efficiency and investment outcomes.
- Local and Regional Investment: Initiatives to encourage investments that support local economic growth while balancing the scheme’s financial responsibilities.
- Governance Improvements: Recommendations to strengthen the oversight and management processes within the LGPS to ensure more robust decision-making and accountability.
Consultation Period:
The consultation is open until 11:59pm on 16 January 2025.
The House of Lords held a debate on State Pension: Age Increase.
Summary of Main Points:
- Concerns over insufficient communication about the pension age change and potential public backlash (Lord Davies of Brixton, Lord Palmer).
- Advocacy for comprehensive outreach through various media and trusted organizations (Lord Foulkes).
- Discussion on fairness and policy implications related to different workforce entry ages and life expectancy disparities (Baroness Bryan, Lord Watts).
- Potential policy changes and their broader impacts on employment and national insurance contributions (Baroness Meacher, Lord Rooker, Baroness Stedman-Scott).
- Government response stressing current communication methods and upcoming policy reviews (Baroness Sherlock).
Open Consultation – Pensions Investment Review: Unlocking the UK Pensions Market for Growth
Purpose: The consultation proposes reforms to enhance the Defined Contribution (DC) workplace pensions market by focusing on scale, consolidation, and value over cost. It seeks to improve the effectiveness of the market in delivering better returns for pension members.
- Key Proposals:
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- Minimum Size and Maximum Number of DC Pension Funds: The consultation suggests legislating for a minimum size and limiting the number of default DC pension funds. This would encourage consolidation, leading to fewer, larger funds better equipped to invest in productive assets and generate higher returns.
- Contractual Overrides: Proposals to enable contractual overrides in contract-based pensions, with member protections in place. This would allow transfers between contract-based or trust-based pension schemes without needing member consent, facilitating the shift to larger schemes.
- Differential Pricing: The consultation explores the impact of differential pricing in a consolidated market and seeks views on how to encourage employers and their advisers to prioritize value when selecting workplace pensions.
- Consultation Period: Closes on 16 January 2025.
