Requirements for defined contribution pension funds are currently inconsistent across the market, according to the government. Under government plans, pension funds will be required to publicly compare their performance data against competitors and disclose their levels of investment in British businesses. These reforms aim to help employers and savers make informed choices. The rollout of automatic enrollment has significantly increased the amount of investment entering UK pension funds. However, the government noted that disclosure requirements for defined contribution pension funds are currently inconsistent and do not provide a detailed breakdown of UK investments.
By 2027, DC pension funds will be required to disclose their levels of investment in British businesses, as well as their costs and net investment returns. Additionally, pension funds will have to compare their performance data publicly against competitor schemes managing at least £10 billion in assets. Schemes performing poorly for savers will not be allowed to take on new business from employers. The Pensions Regulator and the Financial Conduct Authority will have intervention powers to enforce these rules.
Chancellor Jeremy Hunt emphasized the importance of driving growth and improving outcomes for savers through these new rules. Work and Pensions Secretary Mel Stride highlighted the success of automatic enrollment in transforming the pensions landscape over the last decade. Various industry experts and stakeholders welcomed the government’s actions to increase transparency and focus on value for money in UK pension funds. They believe that these measures will ultimately benefit savers and help drive investment into domestic businesses.