Grasp the goals of the Pensions Investment Review, urges Hargreaves Lansdown’s Alastair Stuart-Hunt
Employers should understand the main strands of the government’s Pensions Investment Review ahead of its expected publication, attendees at the Create a Pension Strategy to Deliver Value for Your Workforce REBA webinar, sponsored by Hargreaves Lansdown, on 6 March 2025 heard.
Announced by Chancellor Rachel Reeves in July 2024, the review, due to be published in the spring, aims to move to fewer but larger pension schemes, tackle the huge number of poor value schemes and boost investment in the UK economy.
Alastair Stuart-Hunt, senior client relationship manager at Hargreaves Lansdown explained that there are over a thousand pension schemes in the UK but many are poorly governed and offer poor value for money.
“The government wants to consolidate these and essentially end up with a smaller number of schemes which have much larger assets at their disposal,” he said.
These superfunds could open up investment opportunities into large UK infrastructure projects or unlisted assets – something that some would argue requires scale.
“The government wants to get those assets working in the UK economy to drive growth. Australian and Canadian pension schemes are already investing in big UK infrastructure projects, so why aren't we?” he added.
One proposed mechanism for pension consolidation is the Value for Money Framework from the Financial Conduct Authority, Department for Work and Pensions and The Pensions Regulator.
“The framework would give the Independent Governance Committees, which oversees certain pension schemes, additional powers to assess if the scheme is offering value for money or not,” Stuart-Hunt said.
“If it’s not, it could be moved into a scheme that does offer value for money. So we can be confident over the longer term that the schemes in operation will broadly be offering value for money.”
Stuart-Hunt also pointed to some potential risks of the framework: that default funds become homogenised due to peer comparison with other providers, an over-reliance on default funds which cannot be right for every investor, and that people take less risk – something that might ultimately deliver better outcomes in the long run.
“Employers should consider how can they empower their members to become more confident investors,” he added.
