Labour ‘deceiving savers in pension row with Lords’

The Government has been accused of ‘deceiving millions of savers’ over plans which enable ministers to force workplace pension schemes to invest in the risky private credit sector and their own pet projects – such as infrastructure and renewable energy.

It comes as peers prepare to debate the Pension Schemes Bill containing the controversial clause in the House of Lords tomorrow.

Under the Mansion House accord, 17 of the largest pension providers promised to invest at least a tenth of their default auto-enrolment funds in risky, private or unlisted assets by 2030 – with half of that in the UK – in a bid to boost growth.

The voluntary deal means the vast majority of staff pensions savings would be funnelled into these funds, potentially affecting the size of their retirement pots.

But, crucially, the Government also wants to reserve the right to compel schemes to invest where it sees fit, such as if they are deemed to be falling short on their commitment to back UK assets.

Ministers have vowed to increase the investment pipeline, but opposition peers and many pension experts are not convinced.

Thin-skinned: Pensions minister Torsten Bell has blocked a critic on social media

‘There is no justification for the Government reserving to itself the power to dictate where trustees invest on their members’ behalf,’ pensions expert Tom McPhail wrote on social media.

He also took aim at Chancellor Rachel Reeves and pensions minister Torsten Bell, saying they were ‘deceiving the millions of savers who rely on workplace pensions’.

In response, Bell blocked McPhail from his X account.

McPhail told The Mail on Sunday he would ‘absolutely’ treat the ban as a badge of honour, adding that Bell was ‘not a man overly troubled by self-doubt’.

Reeves has also been compared to the fictional Mafia boss in The Godfather film over the way she is trying to force pension funds to buy UK assets. Tom Selby, a pensions expert at investment platform AJ Bell, said there was ‘something a bit Vito Corleone’ about her as she could order schemes to invest in domestic deals if they did not ‘voluntarily’ bend to her will.

Pension funds have been criticised for being too risk-averse and not investing in home-grown ventures. But the sector is concerned that any attempt by ministers to channel workers’ savings into Whitehall’s pet projects would clash with the legal duty of scheme trustees to act in members’ best interests.

Peers led by former pensions minister Baroness Altmann and London Stock Exchange board member Baroness Bowles are leading the bid to keep politicians out of funds’ investment decisions.

‘Ministers insist these are just backstop powers. They will only be used to force schemes to invest as Government dictates if they don’t do it themselves, so we shouldn’t worry about the mandation clause,’ said Altmann.

‘But that is precisely the worry. Once the measure is in primary legislation, the Government could use it as it wishes and any assurances about not intending to use it may prove worthless.’

A Treasury spokesman said: ‘Pension funds have committed to private market investment targets in the UK voluntarily, due to the potentially higher returns and security for savers.

‘Thanks to our Pension Schemes Bill, an average earner’s pension pot could see a boost of £29,000, making pension pots work harder for savers.’