𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Labour has been warned to “keep its hands off people’s savings” over plans to give the Government powers to tell pension providers where to invest. The Tories warned the move could allow ministers to force private pension funds to put money into “whatever takes their fancy”, such as Ed Miliband’s net zero schemes.

Tory frontbencher Helen Whately has written to Work and Pensions Secretary Pat McFadden, urging him to ditch the measure. The proposal in the Pension Schemes Bill, currently making its way through the House of Lords, will give ministers the power to require pension funds to invest a certain proportion of the money they hold either in the UK or in assets that benefit the British economy.

Ms Whately said: “There is a real danger pension mandation becomes a political slush fund.

“Labour could force pension funds to invest in whatever takes their fancy – Ed Miliband’s ideological net zero schemes, for instance. And Reform UK suggest they’ll use pension savings to prop up failing water companies.

“Either way, this approach to pension funds isn’t in the interest of savers, who’ve worked hard to put this money aside. Government should keep its hands off people’s savings.”

In her letter to Mr McFadden, Ms Whately raised concerns about “the potential damage these provisions may do to the savings of millions of people”.

She added: “These clauses may have been included in the Bill with the best of intentions, but as ever, there will be unintended consequences.

“It is an extraordinary open-ended power which could be used by ministers to pursue political priorities, instead of what is best for savers.”

There are fears the plan will lead to lower returns for pension funds, meaning smaller pots for people to live on once they retire.

A voluntary agreement is already in place for the largest workplace pension providers to invest 10% in assets that boost the economy such as infrastructure, property and private equity by 2030, with 5% into UK assets.

The proposals have come under fire from groups including Pensions UK and the Association of British Insurers.

A Government spokesperson said: “Our pension reforms will unlock billions of pounds for the UK economy, supporting businesses to grow and creating well-paid jobs across the country that put more money into people’s pockets.

“Pension funds have committed to private market investment targets in the UK voluntarily, due to the potentially higher returns and security for savers.

“And thanks to our Pension Schemes Bill, an average earner’s pension pot could see a boost of £29,000, making pension pots work harder for savers.”