Mansion House signals encouraging steps but implementation challenges remain

Commenting on the Chancellor’s Mansion House speech, Ian Bell, Head of Pensions at RSM UK, said: “It’s encouraging to see the Chancellor building on previous proposals to focus on consolidation and scale to improve investment opportunities and performance for our DC market and local government pension schemes (LGPS). However, given the slow progress on the LGPS pooling project, which was initially launched by George Osbourne some nine years ago, implementation will remain the challenge in making this happen and at an increased pace. 

“To ensure the government’s pensions strategy is realised, the role of NISTA and the pipeline of investable UK infrastructure projects that are released over the next 10 years will be key. The British Growth Partnership will also help with inward investment into venture capital funds and innovative businesses in the UK. 

“But, given the global marketplace, it isn’t clear how these projects will be made available to UK investors, without the risk of them being snapped up by the global investment community. In addition, once they are scaled up, how can these UK opportunities be made more attractive to pension schemes than other global opportunities? Ultimately Trustees will still have a duty to balance investment return and risk for their scheme members.”

He added: “Clarity is also needed on how LGPS members will see their investments focussed on investment projects in their local community. Currently, the Trustees have the ability to use their funds on suitable local projects, but that element of control will change under pooling. Government has promoted this local focus in the run up to Mansion House, but it’s hard to see how the two ambitions can work hand in hand in practice. As ever, the devil with be in the detail and the consultations will be key to ensure the sector can unlock investment which supports long-term economic growth.”