Liberal Democrats vow to push back controversial Pension Schemes Bill

The government has been warned that the Pension Schemes Bill will continue to be pushed back unless ministers remove controversial mandation powers, as a groundswell of opposition puts pressure on the government to water down the bill.

The warning comes as the House of Commons gears up for the bill to bounce back from the Lords on Monday, after the upper house once again defeated the government on Wednesday evening.

It marks the second time peers have sent the issue back to the Commons, after rejecting the government’s revised wording of the mandation power.

Liberal Democrat peer Baroness Bowles, who led the opposition to the revised wording, said the concessions offered so far amounted to “fiddling around the edges” and failed to address the core problems within the powers.

The power would allow ministers to dictate where pension funds allocate their capital and has been viewed across the Square Mile and Westminster as a power grab to fund politicians’ pet projects, such as HS2.

Not the experts

Baroness Bowles said: “The government aren’t the experts on pension investments. 

“They want to choose what to do with retirement savings, rather than the experienced professionals and trustees who must operate in people’s best interests.”

The party has also called on the government to “properly address two central objections”, including the subordination of trustees’ fiduciary duty which the Lib Dem’s argue lower funds’ duty to savers to maximise returns in favour of national growth.

The Lib Dems also called out the exclusion of listed investment companies, investment trusts on the London Stock Exchange which invest in other assets such as start-up companies, from mandation targets.

The opposition has expressed confusion at their exclusion, with the government’s productive financing working group hailing them as a perfect vehicle for investment in UK growth.

Fears have grown among the opposition and industry figures that their exclusion locks out billions from established trusts and instead steers investment towards newer, less-proven vehicles such as long-term asset funds (LTAFs).

Conservative peer Lord Lucas also called mandation a “dead end, and at its heart poisonous” during Wednesday’s session.

Tick Tock

The government is now facing a pressing choice to back down and negotiate with the opposition as the end of the parliamentary session inches closer.

Failure to pass the bill through the two houses before the session ends could see the government lose the bill entirely.

While those opposed have accepted concessions so far, including the statutory cap, a one-time use restriction on the power and a full sunset on the regime by 2035, the wish to see the bill watered down further.

The Conservatives also vowed to keep pushing back on the bill, with shadow chancellor Mel Stride previously slamming the government for making savers “fund the pet projects of Rachel Reeves”.

But so far it seems pension minister Torsten Bell is refusing to back down completely and push through the bill with the clause still in place.