Poorly performing UK pension plans to face ban on new members

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Poorly performing pension plans will be banned from taking on new business as part of a major shake-up of Britain’s £120bn workplace retirement market, under government plans unveiled ahead of next week’s Budget.

Chancellor Jeremy Hunt on Saturday announced measures aimed at improving returns for millions of retirement savers by forcing pension funds to publish data comparing their performance to rivals, a requirement introduced successfully in Australia.

The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) would have “a full range of intervention powers” to deal with poorly performing pension funds, the Treasury said. Those powers could include a ban on funds taking on new business from employers.

The pension reforms are part of Hunt’s efforts to stimulate the economy and will include a requirement for so-called defined contribution pension funds to disclose from 2027 how much they invest in the UK.

“We have already started on a path to drive growth, unlock capital for our most promising companies and improve outcomes for savers — and these new rules mean employers and savers can see how their money is invested and how the returns compare to other schemes,” Hunt said.

“British pension funds appear to contribute less to the UK economy than international counterparts do as they invest less in our domestic businesses. These requirements will help focus minds on how to improve overall returns and outcomes for savers.”

Nausicaa Delfas, chief executive of The Pensions Regulator, said with more disclosure helping to spark competition between schemes, and enhanced powers to crack down on poor performers, “we can really deliver for savers, now and in the future.” 

Yvonne Braun, director of long-term savings at the Association of British Insurers, welcomed the plans to compare the performance of pension providers. She…