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Pension Funds: Science and Technology

Question for Department for Work and Pensions

UIN 92652, tabled on 22 September 2020

To ask the Secretary of State for Work and Pensions, what assessment she has made of the effect of changes to the fee cap proposed in her Department's consultation entitled Improving outcomes for members of defined contribution pension schemes on the ability of pension funds to invest in venture capital-backed science and technology businesses.

Answered on

30 September 2020

The Government is ambitious about investment in science and technology which is why we issued our Consultation this month We want to enable schemes to invest in venture capital-backed science and technology, and welcomes the continued growth of investment in these asset classes by pension schemes. All scheme members should have the opportunity to benefit from a broader range of assets to improve the returns they achieve, and to drive new investment in important sectors of the economy.

The Government consulted in February 2019 on an additional assessment method to enable trustees of Defined Contribution pension schemes to account for performance fees incurred when investing in some less liquid assets, while retaining scheme member protection under the charge cap. The proposal was supported by the majority of consultation respondents as a measure to enable greater investment in these asset classes.

A further consultation published earlier this month[1] sets out draft regulations, building on our earlier consultation, which propose amendments to the way that compliance with the charge cap is measured in relation to performance fees. We also propose developing an additional, multi-year approach to calculating performance fees. Further assessment and discussion of the effects of the proposal with industry is taking place over the next few weeks. Following this our intention is to bring this legislation into force in 2021.