Key Takeaways
- • Chancellor Rachel Reeves has confirmed the government will create a "backstop" power enabling it to force large UK pension funds to back British assets, according to the Financial Times.
- • The reserve power sits within the Pension Schemes Bill, which gained Royal Assent, and would let ministers direct specific investment allocations for private-sector workplace pension funds.
- • Business Secretary Peter Kyle told pension funds to "get off their high horses" and invest in Britain or be compelled by law to do so.
- • The government is reportedly preparing to limit the reserve power clause, which critics say contains open-ended "Henry VIII" provisions with no set limits on the amount or type of assets involved.
- • The policy is part of a wider plan to double the number of UK pension megafunds (currently £25 billion-plus) by 2030 to channel capital into private markets and domestic growth.
Summary
The Financial Times reports that Chancellor Rachel Reeves has confirmed she will create a "backstop" power to force large pension funds to back British assets, as part of her effort to unleash more domestic investment. The measure is a reserve power that the government has said it will introduce to compel private pension funds to invest in UK assets if voluntary action proves insufficient.
The power is tied to the Pension Schemes Bill, which has since received Royal Assent. According to parliamentary material cited in publisher coverage, the Act enables trustees to pass resolutions conferring express investment powers, and would allow ministers to direct specific investment allocations for private-sector workers' pension funds in connection with automatic enrolment. Commentary on the bill has highlighted "Henry VIII" clauses that set no explicit limits on the amount or type of assets the government could require pension funds to purchase, drawing objections from industry participants.
Business Secretary Peter Kyle has been publicly direct on the issue, telling UK pension funds to "get off their high horses" and invest in Britain or be forced to do so by law. Reports also indicate the government is set to limit the controversial reserve power clause, though the final scope of any restriction is not detailed in the available sources.
The measures sit alongside government plans to double the number of UK pension megafunds by 2030, a initiative intended to unlock billions of pounds for investment in British infrastructure, growth companies and private markets. Coverage notes the proposals have been widely opposed by parts of the pensions industry. Figures for the scale of any mandated allocation have not been specified in the sources reviewed.
The power is tied to the Pension Schemes Bill, which has since received Royal Assent. According to parliamentary material cited in publisher coverage, the Act enables trustees to pass resolutions conferring express investment powers, and would allow ministers to direct specific investment allocations for private-sector workers' pension funds in connection with automatic enrolment. Commentary on the bill has highlighted "Henry VIII" clauses that set no explicit limits on the amount or type of assets the government could require pension funds to purchase, drawing objections from industry participants.
Business Secretary Peter Kyle has been publicly direct on the issue, telling UK pension funds to "get off their high horses" and invest in Britain or be forced to do so by law. Reports also indicate the government is set to limit the controversial reserve power clause, though the final scope of any restriction is not detailed in the available sources.
The measures sit alongside government plans to double the number of UK pension megafunds by 2030, a initiative intended to unlock billions of pounds for investment in British infrastructure, growth companies and private markets. Coverage notes the proposals have been widely opposed by parts of the pensions industry. Figures for the scale of any mandated allocation have not been specified in the sources reviewed.
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