Jurisdiction(s):
United Kingdom

UK Spring Budget 2024: DC pensions reforms—productive finance, tougher VFM regime and a lifetime provider model; disclosure duties, enforcement powers and trustee fiduciary challenges

Published on: 22 April 2024

Published by a Law360 reporter

Legal News

Article summary

Largely, these changes extend the so‑called productive finance push the chancellor has backed since summer 2023, alongside efforts to lift outcomes for defined contribution (DC) pension savers through the value for money (VFM) framework and the lifetime provider model. The strands are closely connected, and the legal and operational issues for pensions professionals run across all three. Although further specifics are awaited, it is already evident that trustees and providers will have to fundamentally rework their investment approach and the way they prove they are securing good outcomes for pension savers.

Productive finance

In recent years, successive chancellors have proposed ways to spur pension schemes to back investment in Britain, yet such blueprints have typically lacked substance. The current chancellor, Jeremy Hunt, appears to have embraced the agenda in full. In summer 2023 he set out proposals to accelerate consolidation across the DC market and to promote allocations to less liquid assets. Since that summer, nine of the UK’s largest DC schemes have signed the Mansion House Compact, under which they pledge to place 5% of assets under management into less liquid holdings, signalling a tangible shift towards productive finance within workplace pensions as part of this broader reform drive...

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