What Is On Our Pensions Wishlist from Chancellor Rachel Reeves?
Published / Last Updated on 10/07/2024
The Labour Party won a landslide victory in the UK General Election last week. We now have a new Prime Minister, Sir Keir Starmer and a new Chancellor of the Exchequer, Rachel Reeves.
Mrs Reeves gave her first speech as Chancellor on Monday and set out her initial measures to boost UK growth.
Planning Reform
Planning reforms to speed up planning and get Britain building with a target of 1.5m new homes over the next 5 years of Labour’s tenure as the elected government. They will revisit Green Land, Green Belt, Brown Land and the new ‘Grey Belt’. For example, a disused commercial garage/land is falling into disrepair but cannot be developed as it is in a Green Belt – this we believe is the likely type of land to be deemed in a ‘Grey Belt’.
Using the Pension System to Drive Investment
Mrs Reeves also suggested that the area of pensions and retirement will get a full review to get UK pensions working harder for the UK economy. We already know certain items instigated by the Conservative government and now expect Labour to deliver on:
- Forcing UK pension funds to disclose the % of funds invested in the UK and to look to enforce a minimum of 5% be invested in UK assets.
- Autoenrollment of workplace pensions to be expanded to younger ages and possibly an increase in both employer and employee contributions.
- Deliver the Pensions Dashboard. A ‘one stop’ portal where all your pensions and retirement related savings to be displayed in one place (including state pensions) to allow you to have an instant view and overall picture of individual schemes and combined totals to be in a more informed position of your likely retirement position.
- Finally get the FCA to clarify, define and document the different between financial guidance (limited liability for advisers and cheaper to enable more people to get financial help) and financial advice (costs more as advisers have a much greater liability). This will allow lower income families that cannot afford full advice to access financial professionals at an affordable price and bridge the ever widening “advice gap”.
Our Wishlist: Unlock Pensions to Develop the UK Economy
Two of the main yet basic social problems in the UK are the care system and the housing crisis. Pension funds cannot currently invest in residential property and can only invest in commercial property. This should be revisited to access the £billions that are sitting in pension funds.
We do not believe that pension funds should be allowed to buy your main residence or a 2nd home/Holiday Home. We do believe that pension funds should be allowed to invest in residential property for rent or care.
- Allow pension funds to buy commercial property that can be converted to mixed use e.g. Shop/Office Front and upstairs be converted to residential flats/apartments to let.
- Allow pension providers and fund managers to develop collective investment funds specifically to invest in property development. Individual pension scheme members would not then own residential investment property directly but collectively could build swathes of new build construction sites to then sell/rent to the public.
- Allow pension funds to buy larger residential property to convert to Houses of Multiple Occupation (HMO).
- Allow pension funds to invest in or build care homes or sheltered accommodation meaning the availability of later life property and care home beds expands exponentially and your pension fund makes money from are home fees/rents in sheltered as well as you having your own ‘space’ booked and paid for just in case you need sheltered or care home accommodation in later life.
- Allow early access to your own or other relatives pension funds to raise deposits to get younger people on the property ladder.
- It could be that pension funds are allowed to do all or any of the above but have a rental cap of say 5-6% of the property market value. This would mean cheap rents for many and stable returns for the pension fund
