During debate on the Pension Schemes Bill MPs approved a reserve power that lets ministers force pension schemes to invest billions of retirement savings in private markets and other assets. The measure drew criticism when it was first proposed last summer. Pensions professionals said it would put retirements at risk and remove investment decisions from trustees and investment experts.
The House of Lords rejected it last month but ministers came back with a revised proposal that MPs passed on Wednesday. Helen Whately who is the shadow work and pensions secretary called the move another attack on savers. Sir Mel Stride the shadow chancellor said it would let pension savings be used as an economic bailout by Rachel Reeves.
The Telegraph started a campaign to remove the measure last month. The bill will go back to the House of Lords for another vote but Baroness Ros Altmann a former pensions minister said peers still want to reject it.
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In May 2026 the Government signed the Mansion House Accord with 17 major providers who control 90 percent of pension savings. Each one agreed to invest at least 10 percent of their assets in private markets including 5 percent in Britain by 2035. Ministers announced the following month they would keep a reserve power to force providers into investments if the agreement failed.
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The Government said it did not plan to use the power but the House of Lords rejected the plan last month because it lacked specific limits on how much investment could be mandated. After widespread opposition mostly from the pensions industry, the Government revised the proposal to match the Mansion House Accord. It kept the power to force schemes to invest but only for 10 percent of their assets & 5 percent in Britain. MPs approved it by 276 votes to 155.
The Conservatives said it still put retirement savings at risk & promised to reverse the policy if they formed the next government. Sir Mel said Labour has watered down its proposal after fierce opposition but it needs to be ditched completely. He said savings should be invested in the best interests of savers and not to fund the pet projects of Rachel Reeves.
He added that under a Conservative government pension pots would be there for savers alone and not for Rachel Reeves to bail herself out of the economic mess she has created. Ms Whately said Labour wanted to seize control over 400 billion pounds of private pension savings but that money is not theirs to spend. She called it another attack by this Government on savers who do the right thing.
She warned that if people lose confidence in pensions they may opt out of auto-enrolment altogether and end up with even less in retirement. The bill will return to the House of Lords next week. Baroness Altmann said the Lords remain determined to reject the Government mandation of pension investment decisions. She said the proposals would give future ministers wide powers to direct investment into politically favoured assets even if pension managers have decided this is not in their members best interests.
She added there is no reason to believe the Government knows better than professional managers how to invest members money. A government spokesman said the Mansion House Accord was an industry-led commitment by 17 major pension providers. He said workers deserve their savings to work as hard for them as they worked to earn them.
He added that this industry-wide change is taking place and they do not expect to use the reserve power because it is only there as a backstop to give providers confidence the whole market will move together.
