Autumn Budget 2021: Pension charges and authorised investments

Greater investment opportunities for pensions 

Back in spring 2021, Chancellor, Rishi Sunak announced a consultation on the rules on permissible investments for pension funds, with an overriding objective of steering pension monies into long-term projects. At a glance, this would seem like an eminently sensible idea, particularly given the fact that an individual’s pension savings are often not accessed for many years, if not decades. The expectation is that by committing funds to projects involving UK infrastructure and green technology in particular, will provide the investor with potentially superior returns than they could expect from the current investment fund options.

In August, the prime minister and the chancellor wrote an open letter to the pensions industry challenging them to support the idea by either investing, or providing individuals with the facilities through which to invest, in such projects.

In addition, earlier this week, the Financial Conduct Authority (FCA) announced its plans to take forward proposals to create a new open-ended authorised investment fund. The Long Term Asset Fund (LTAF) regime will be designed specifically to support such investment. The chancellor also announced in today’s budget, plans for a consultation into the lifting of the 0.75% cap on annual management fees on workplace pensions, in order to further support the initiative.

These developments further highlight the importance of keeping personal retirement savings and, more specifically, the investment options under constant review.

Pensions dashboard

In other pensions news, the Pensions Dashboard Programme (PDP) has just provided a progress update. The PDP is the group responsible for delivering the long-awaited pension dashboards, which are intended to provide users with an online service that will display details of all of their pensions, securely and in one place.

Given the numbers of pension providers that will be required to cooperate, and the vast amount of data that will need to be collated in order to make this achievable, this was always going to be a challenge. However, the PDP’s latest update suggests that they are on track to go live in 2023. The project still faces many challenges and will require additional legislation before we can become too confident that the current suggested timescales will be kept to.

If you would like to talk through your pension plans, please contact me or a member of the financial planning team.