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\t\tTorsten Bell has come under fire over the pension schemes bill\t<\/p>\n\t\t\tThursday 02 April 2026 11:07 am\n\t\t\t<\/p>\n
\t\tTorsten Bell has come under fire over the pension schemes bill\t<\/p>\n
London\u2019s pension industry is in uproar over government proposals to keep what is known as \u2018backstop power\u2019 over the precise level of investment from funds in specific UK assets.\u00a0<\/p>\n
Torsten Bell, the pensions minister, has become the focus of anger at Whitehall\u2019s attempts to exert a degree of control over where some of the biggest names in the City put their money.\u00a0<\/p>\n
The power set out in Labour\u2019s pension schemes bill has been seen in the Square Mile as a Westminster power grab.\u00a0<\/p>\n
The proposal was shot down in the House of Lords after a fierce debate and now the government is seeking amendments to the legislation to keep the powers, which it sees as a key way of bringing a supply of fresh liquidity to stimulate London markets.\u00a0<\/p>\n
It comes amid concern that the London stock exchange has been struggling to keep up with global rivals, especially New York, despite record highs for the FTSE 100 before the outbreak of war in the Gulf.\u00a0<\/p>\n
But in the Lords debate which rejected the proposed mandate\u00a0Baroness Stedman-Scott, a Conservative member, called it \u201cdangerous and unjustified\u201d, giving ministers \u201csweeping authority to mandate pension investments to whatever level they choose\u201d.<\/p>\n
Ministers will reportedly make concessions in a bid to push the power through the Lords.\u00a0 A new clause is expected to be written into the bill after the Easter break setting a limit on future use of the reserve power.<\/p>\n
Baroness Ros Altmann, a cross-bench peer,\u00a0asked: \u201cDo the government really believe that they know better than the investment industry?\u201d.<\/p>\n
The fresh clause will say that ministers will not be able to force funds to invest more than 10 per cent of their assets in private markets, at least half of which will be invested in the UK.<\/p>\n
As currently written, the bill has no cap<\/a>. Instead, it reflects a voluntary target agreed in the industry-backed Mansion House Accord.<\/p>\n Despite the concession, the government remains determined to keep the backstop power to ensure UK funds honour promises to invest at home, but key London figures complain the bill fails to set out clearly how such rules will actually spur growth.<\/p>\n Where are the investment trusts?<\/p>\n Under the draft, investing in listed investment companies and trusts that hold private assets will not count toward firms meeting the legislation\u2019s requirements.<\/p>\n It comes despite pension assets remaining the single largest institutional client for the UK investment management industry, accounting for 51 per cent according to the Investment Association.<\/p>\n Pension assets account for \u00a32 trillion of the \u00a33.8 trillion held by investment managers, while investment companies have injected over \u00a3110bn into private assets including areas critical for growth such as energy and infrastructure.<\/p>\n The exclusion has caused the Association of Investment Companies (AIC) to hit out at the bill, claiming that it would damage the industry, drive up costs and offer lower quality returns for savers.<\/p>\n Richard Stone, chief executive<\/a> of the AIC, said: \u201cWe do not support compulsion, it should be left to independent trustees to make investment decisions on behalf of pensioners, not the government.<\/p>\n \u201cLeaving that aside, if compelled to do so, it is ridiculous that the current Bill does not allow pension schemes to invest in investment trusts to meet their allocation to private assets.\u00a0<\/p>\n \u201cIf they remain set on introducing these powers, we are urging the government to fix this Bill and make sure pension schemes have the option of using investment trusts to gain this exposure.\u00a0<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tUK ministers to push ahead with \u2018capped\u2019 mandation powers after peers backlash<\/a><\/p>\n \u201cExcluding investment trusts is a snub to the London market and ignores the proven benefits of the investment trust structure for private assets.\u201d<\/p>\n Stone argued pension schemes would be able to benefit from \u201cincreased competition and choice\u201d as well as being able to invest in portfolios which often trade at large discounts.<\/p>\n Others have voiced frustration at the inability to invest in UK-listed vehicles, such as trusts, despite the government ploughing forward with a power to invest in UK private assets, arguing that the bill instead favours unlisted private equity.<\/p>\n Confusion at the heart of government\u2019s agenda<\/p>\n Others have expressed confusion in the need for the power at all, as the government used to be able to utilise venture capital trust (VCT) tax relief.<\/p>\n