The Mansion House reforms: steps forward, but careful scrutiny required | PLSA
The Mansion House reforms: steps forward, but careful scrutiny required

The Mansion House reforms: steps forward, but careful scrutiny required

11 July 2023

In yesterday’s Mansion House speech, the Chancellor set out number of areas of reform for Government policy on pensions across DC, DB, CDC and the Local Government Pension Scheme.

This morning the Minister for Pensions gave further detail and launched a series of consultations and calls for evidence on the reforms. The responses for this package are all due on 5 September. A DLUHC consultation closes on 2 October.

A number of the measures continue January’s DC reform package and commitments made in the Budget. They fit into the wider context of the Government’s key objective to enable greater investment in illiquid assets to achieve both growth in the UK economy and greater investment returns for pension savers. The PLSA has made the case to both Ministers and officials that it is essential to preserve the right of pension funds to invest only in the interest of scheme members, in line with their fiduciary duty, so we were pleased that the Government upheld this approach.

The measures and consultations announced today will have a significant influence on the future of the pensions sector. We will be responding in full to the consultations, seeking your views and input. Please watch out for further communications and surveys.

DC decumulation

A new consultation seeks views on proposals to require pension schemes to offer their members retirement products and services to meet their diverse needs. This aligns with the PLSA’s Guided Retirement Income Choices framework, intended to remove inequalities in the options open to members of different schemes, and to provide solutions which cater for income needs sustainably and flexibly. The Government is also encouraging schemes to consider offering a collective DC option for decumulation as an alternative means to access a sustained income.

We will be engaging with members and holding a roundtable to gather input on 26 July. Please contact [email protected] if you’d like to attend.

Small pots

Following the call for evidence on small pots, the DWP has set out its legislative intentions in a consultation seeking views on its favoured multiple default consolidator model. Alongside this, the DWP proposes:

  • A small pot would be classified as one of £1000 or less, with no minimum size for automatic consolidation.
  • A pot would be eligible for automatic consolidation 12 months after the last contribution was made to it.
  • Schemes will be encouraged, but not mandated, to undertake same scheme consolidation.
  • A new central clearing house would inform schemes where to transfer eligible deferred pots.
  • An industry group will be set up in late 2023 to explore the design and implementation of the default consolidator framework.

The PLSA and Association of British Insurers (ABI) led Small Pots Coordination group has previously looked at these issues in detail and fed into the DWP’s work on this topic. If you would like to engage with the PLSA on this, please contact [email protected].

DC Value for Money

The DWP has published its response to the consultation earlier this year on plans to establish a framework to compare the value DC default schemes offer, based on investment performance, costs and charges, and service.

Under the proposals, schemes would have to disclose standardised metrics to a central regulatory database. Where a scheme is assessed as poor value against peers, it will have a defined timeline to improve. The Pensions Regulator will have new powers to enforce wind up and consolidation if it does not. Notably, there is increased emphasis on the ability of the VFM framework to increase scheme investments in illiquid and private market assets. For more information, please contact [email protected].

Collective DC

The Government has outlined the next steps after consulting on how to extend the existing single-employer CDC regime to whole-life multi-employer schemes in the trust sector.

Through investment and longevity pooling, CDC has the potential to improve pensions adequacy for savers whose employers are unable to set up a standalone scheme. The proposed regime will largely reflect that in place for single-employer schemes. It sets a high bar for areas of authorisation including financial sustainability and management, and clear member and employer communications. However, certain flexibilities, for instance around start-up funding and transfer options during wind-up, will be afforded in order to avoid stifling a nascent market.

The Government will consult on draft regulations for whole-life multi-employer CDC schemes in the Autumn. For more information, please contact [email protected].


A Government call for evidence seeks views on improving the skills and expertise of DC, DB, and CDC scheme trustees so they can manage schemes as effectively as possible for their members.

The call examines three areas: existing trustee effectiveness, the role of investment consultants in supporting trustees, and the extent to which fiduciary duty may hinder trustees. In line with the wider package of measures announced, the Government hopes that by increasing trustee expertise, especially regarding investments, allocations to illiquid assets might increase.

Notably, however, the Government stops short of proposing professional trusteeship as a requirement for all schemes.

For more information, and to feed into our response, please contact [email protected].


The Government’s response to a DWP consultation on the consolidation of DB schemes states that the vast majority of respondents were supportive of the proposals and keen to see Superfunds up, running and regulated in the UK.

The Government believes that Superfunds are likely to invest more productively than many closed DB schemes, benefiting from the scale achieved through consolidation, the additional support delivered by the entry price paid by the employer, and a significant capital buffer provided by the investors.

Superfunds will be authorised and supervised by TPR – with the interim regulatory regime reviewed and a permanent regime established. We support the move to a permanent regulatory regime and have been calling for this for some time.

For more information, please contact [email protected].

Options for DB schemes

A DWP call for evidence supports the development of innovative policy around how DB pension schemes could increase investment in productive asset classes.

This includes exploring the provision of more equity capital and finance for businesses in the UK. This includes start-ups, infrastructure and private equity, as well as longer-term investments, typically in illiquid assets – termed ‘productive finance’.

The call for evidence covers increasing investments in productive assets, building surplus, the benefits and drawbacks of a public consolidator, and the PPF acting as a public consolidator.

For more information, please contact [email protected].

LGPS investment

A new consultation proposes to accelerate and expand LGPS pooling, with a March 2025 deadline for funds to transition all listed assets, as a minimum, to their pool. The Government has also confirmed a target for funds to invest up to 5% of assets to support levelling-up in the UK, and has set an ambition for funds to have 10% of their assets invested in private equity.

For more information, and to feed into our response, please contact [email protected].

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