The King’s Speech will set out the new government’s legislative agenda for the next parliament with pensions and plans to drive investment set to feature heavily.
The King’s Speech, due to take place tomorrow (July 17), signals the state opening of parliament and is expected to outline about 35 bills the government intends to introduce in the next year or so.
The package of bills will focus on growing the economy through the building of houses and infrastructure, better transport, more jobs and securing clean energy, according to the government.
But what else can we expect to see?
Pushing investment
The Labour government has said one of its priorities is to grow the economy and that it will look to use the investment power of pension funds to encourage more people to invest in UK companies.
According to Labour, at the turn of the century, UK pension funds and insurers held 39 per cent of shares listed on the London Stock Exchange. By 2020, they held just 4 per cent.
AJ Bell said this could see a continuation of the ‘Mansion House’ agenda started by the previous government, which placed a focus on boosting private equity holdings in occupational pension schemes.
Rachel Vahey, head of public policy at AJ Bell, said: “The government will be casting an eye over the thousands of pensions schemes in the UK with the aim of consolidating them into larger more powerful schemes, hoping to unlock their investment potential."
But she warned while harnessing investment in UK pension schemes might offer benefits, the government must not lose sight of the individual pension saver.
“Forcing schemes to invest in UK Plc means exposing these savers to greater investment risk – risk many of them would be uncomfortable taking on,” she added.
“Pension scheme trustees need to bear this in mind. Their responsibility is to protect their members from harm and get the best investment returns they can for them, even if this is not aligned with government ambitions.”
Pension reform
Labour set out in its manifesto that it would carry out a review of pensions, again with the aim of encouraging greater investment in UK plc but also to improve outcomes for members.
In addition to private investments, a review could look at making changes to auto-enrolment by lowering the age to 18 and start counting pension contributions from the first pound of salary.
It could also look at how to push minimum contribution rates beyond the current level of 8 per cent of qualifying earnings.
Nigel Peaple, director of policy and advocacy at the PLSA, wants to see a pensions bill in the speech tomorrow.
He said this would allow the government to quickly progress any recommendations arising from its pensions review and pick up important areas of policy reform already initiated by the previous government.
