- Chancellor Jeremy Hunt has kept his job at the top of the Treasury ahead of the Autumn Statement next week
- Pensions minister Laura Trott MP has left the role to become Treasury chief secretary, Number 10 has confirmed (UK Prime Minister on X: "Laura Trott MBE MP has been appointed Chief Secretary to the Treasury @hmtreasury)
- Trott will be responsible for setting departmental spending limits in her new job
- The Mansion House reforms, designed to encourage greater consolidation and risk taking among UK workplace pension schemes, will be a central focus for the new pensions minister
Tom Selby, head of retirement policy at AJ Bell, comments:
“With an Autumn Statement to be delivered this month and Rishi Sunak keen to demonstrate stability around the nation’s finances following last year’s disastrous mini-Budget, it is no surprise chancellor Jeremy Hunt has kept his job in the Braverman reshuffle.
“While there isn’t expected to be a huge amount of fiscal headroom for big announcements next week, we are anticipating something on ISA reform and potentially more detail on work to provide clarity around the advice guidance boundary. Both are critical to boosting engagement in saving and investing in the UK.
“More broadly, the chancellor will inevitably face growing calls to unfreeze tax allowances, cut taxes and provide help for businesses struggling with rising costs ahead of next year’s Budget. Managing these demands while keeping the purse strings under control will be a seriously difficult balancing act.”
Pensions minister off to the Treasury
“There is a certain poacher-turned-gamekeeper element to Laura Trott leaving the DWP, one of the biggest spending departments in government, to take on a role at the Treasury which involves deciding how much each department can spend (or not spend as the case may be). There is every chance some of Trott’s early conversations with her former DWP colleagues will be awkward ones given the parlous fiscal situation the Exchequer is in, driven by the triple-whammy of high inflation, high interest rates and low economic growth.
“Trott has certainly made her mark on pensions in her relatively brief tenure in the job, with her major achievement to-date likely to be viewed as getting agreement from government that automatic enrolment should be expanded. We still await details of exactly when changes to reduce the minimum age for auto-enrolment from 22 to 18 and marginally scaling up minimum contributions will be introduced, however.
“That said, not all of Trott’s decisions have been universally popular. For example, pushing back implementation of pensions dashboards, reforms which would allow people to see all their retirement pots in one place online, beyond the general election means a key element to tackling the problem of people losing track of their pensions now feels less certain than before.
“Trott has pressed forward with proposals to automatically transfer deferred pensions worth less than £1,000 to a default consolidator. The DWP reckons there are about 14 million of these pots in existence worth some £4 billion and hopes combining these pensions will mean people are less likely to build up large numbers of pensions with different providers over their lifetime. However, without pensions dashboards these reforms are, at best, only a partial solution to the £26 billion lost pots problem.
“Consolidation of small pensions is part of the government’s broader Mansion House reform agenda, with ministers desperate to drive more capital from workplace pension schemes into riskier investments, namely private equity. Those changes primarily focus on boosting scale within pensions, although they also include controversial proposals to hand employers with a defined benefit (DB) pension scheme surplus greater flexibility to access that money.
“While the government’s desire to drive more capital towards potentially high growth UK-based investments is understandable, the big worry is this will be done at the expense of good member outcomes. Certainly, any claim that tilting asset allocation more towards high-charge private equity investment vehicles will somehow guarantee bigger pensions needs to be treated with extreme caution.
“Realistically, it is hard to imagine the new pensions minister, whoever it may be, will have much room to put their own stamp on the brief. Indeed, given rumours Rishi Sunak could be lining up an early election this summer, there is every chance the shelf-life of the new incumbent will be measured in months.”
