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Barriers to pension reforms: Simply announcing changes won't unlock a growth revolution, says ALEX BRUMMER By ALEX BRUMMER FOR THE DAILY MAIL Updated: 17:02 EST, 13 November 2024 e-mail 1 View comments There is very little of the Tory economic inheritance that has been appreciated by the Chancellor. Rachel Reeves has sought to trash it with her trumped up charge of the worst public finances since the Second World War and discovery of much disputed black holes. So it will come as pleasant surprise at the Mansion House tonight to hear the Chancellor picking up the baton from her predecessor Jeremy Hunt on pension fund reforms.
After an interim review by colleague Emma Reynolds, the Chancellor will unveil a plan designed to unleash more investment in Britain’s creaking infrastructure, local communities and hopefully technology, IT and pharma start-ups. Pension reform: Chancellor Rachel Reeves wants to unleash more investment in Britain’s creaking infrastructure, local communities and hopefully tech, IT and pharma start-ups At the core of the Chancellor’s blueprint are two big changes. Britain’s diverse collection of 86 local authority schemes will merged into megafunds.
There will be a similar approach for the assets in smaller defined contribution plans. All of this is designed to unleash £80billion of new investment cash. The Chancellor is seeking to emulate the adventurism of the mega Australian and Canadian funds, which are big investors in Britain.
The Government intends to begin the work on amalgamating funds next year with a new pensions bill. There is no doubt the structure of untapped UK funds needs to be reshaped. But simply announcing the changes is not suddenly going to unlock a growth revolution.
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Share this article Share HOW THIS IS MONEY CAN HELP How to choose the best (and cheapest) stocks and shares Isa and the right DIY investing account Fundamental difficulties need to be addressed. Years of safety-first policies have imposed overzealous regulation on the sector and squeezed out adventurous approaches, substituting heavy exposure to the gilt market. It is only asset managers with vision – former Legal & General chief executive Nigel Wilson comes to mind – who have demonstrated the willpower to overcome barriers and build student accommodation and science parks.
In Australia, the origins of the superannuation fund, known as the Aussie Super, can be dated back more than three decades to 1992. The trick to its success as an investor has been to win consumer buy-in. My own family members Down Under look forward to their regular personalised statements from the Super, which show the value of their investments and provide granular detail.
This is akin to the way that many Americans think about their 401K self-invest schemes, which give them a direct line into S&P 500 shares. Reform requires cultural change both at the ‘we know best’ asset management level and among consumers. The involvement of Deputy Prime Minister Angela Rayner, backing the idea that 5 per cent of cash in local authority funds will go to communities, plays to the idea of State compulsion.
What is required are policies embracing citizen capitalism and the very best of British research and development, tech and pharma. In spite of the Chancellor’s well-meant enthusiasm a pensions-driven growth surge is a long way off. Save your energy Cop29 in Baku, Azerbaijan, is so far from any on-the-ground greening of the economy that it can be safely ignored.
Progress is more easily measured by the self-help of the power sector. In the UK, the departing chief executive of SSE, Alistair Phillips-Davies, is showing that steady investment in renewables, alongside traditional power generation, can bring big payoffs. A big driver of the 26.
4 per cent rise in profit to £714.5million in the six months to September was the renewables arm, where earnings leapt fourfold. SSE has shown investors that its £20billion plan to invest in green generation over five years can deliver returns.
In contrast, one of Britain’s largest generators, German-based RWE, is to scale back a planned £46billion of renewable investments in response to Donald Trump’s ‘drill baby drill’ policy. Shell and BP are on much the same course. Message for climate change zealot and Energy Secretary Ed Miliband: there is a middle way.
Roger Wilko Good retail concepts never die. Wilko is roaring back with an opening in Uxbridge. This is the seventh such store since the bankrupt chain was bought by Chris Dawson.
The entrepreneur went from a market stall to create The Range chain and is restoring Wilko to its rightful place in shopping centres. It has an online tie-up to THG and reportedly Dawson has sized up Homebase as a purchase. Enterprise reigns.
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