Torsten Bell concedes on Pension Schemes Bill Mandation Power
The House of Lords accepted final changes to the pension schemes bill mandation power on Tuesday night, after the government backed down on Clause 40. The bill is now set to become law after four rounds of parliamentary back-and-forth over the power that would have let ministers push private pension schemes into set investment areas.
The revised wording narrows that power in several ways. It caps use at 10 per cent of total assets, sets a sunset clause repealing it in 2035, restricts it to default auto-enrolment funds, and requires the government to publish a report on barriers to UK and private markets investment, along with the steps it has taken to address them.
Clause 40 in the Lords
Torsten Bell, the pensions minister, backed down after multiple sessions trying to keep Clause 40 intact. The House of Commons and House of Lords had sent the bill back and forth four times before the government tabled amendments that weakened the power and added reporting requirements.
Under the new text, pension schemes seeking an exemption only need to show that compliance would be likely to cause material financial detriment. The original wording required them to show that complying would cause detriment, a lower bar for schemes asking to be left out.
Baroness Bowles on mandation
Baroness Sharon Bowles led the opposition in the Lords and said, "I am still no fan of mandation, but we have now got it suitably under control." She also said, "There are reasonable guardrails to make sure that it does not go wrong, that we, I hope, never use it, and that we get the additional investments that we all agree in principle are needed."
Helen Whately, the shadow work and pensions secretary, responded by saying, "Rachel Reeves wanted unfettered control over more than £400 billion of private pension savings. But we have cut Labour’s pensions power grab off at the knees." Her remarks pointed to the scale of the assets covered by the dispute and to the opposition’s objection to the government’s reach over them.
Bill passes before session ends
The bill passed before the end of the parliamentary session, removing the immediate uncertainty over whether it would clear Parliament in time. For pension schemes, the change leaves a narrower power tied to default auto-enrolment funds, a 10 per cent ceiling, and a 2035 expiry, rather than the broader version ministers first tried to keep in place.
