Thank you for that kind introduction, and good morning everybody.
I'm delighted to be here today. This is the third time I've been to the ABI in the last couple of months to discuss the government's reform agenda for pensions, and in particular to highlight the work of the pensions Review, I'm very grateful to the ABI.
Thank you, Yvonne and the team here for inviting me today and for also your ongoing commitment to working with the government to tackle the barriers that pension funds face to invest in growth assets. And I'd also like to give particular thanks to the ABI for your comprehensive response to our recent Call for Evidence, which closed last week.
I'm delighted to be here today as the first joint DWP and HMT Minister for Pensions, as Yvonne has set out, the government is determined to bring down the silos between departments which too often in the past, have prevented effective Government and effective reform. And as the First Minister to sit between these two great Departments of State, I am excited by the job of work ahead.
We face many challenges, but also we face many great opportunities to drive significant reform of pensions. As the Pensions Minister, I have two overarching objectives, first to increase pensions, investment in UK productive assets, supporting UK businesses of all sizes to grow and expand across the country. Second, to improve retirement outcomes for future pensioners, which everyone in this room and many millions of savers across the country have a stake in.
Both of these objectives require more economic growth. The Chancellor reiterated in her commitment to powering growth in every part of Britain in her recent speech [political content redacted], growth is the most important of the government's five missions to rebuild Britain, and as you will know, reforming pension investments is a crucial part of that.
Earlier this year, in the King's Speech, our new government announced a Pension Schemes Bill which includes three key elements. First, the Bill will enable the consolidation of multiple small pots, helping bring individuals eligible pots together in one place. This will support people to keep track of their savings so they can live better and more comfortably in retirement, but it will also mean that consolidators will generate scale at a greater rate, improving opportunity for investment.
Second, the Bill will introduce a Value for Money Framework for defined contribution schemes, which you've already mentioned, to drive consolidation of the sector. We want to see fewer, larger providers who have the scale and expertise to invest in a more diverse portfolio. The Value for Money Framework will also contribute to economic growth, as there will be an increased focus on assets that can deliver long term value.
Third, the Bill will introduce a requirement for pension schemes to offer retirement products, including a default retirement solution. It is crucial that we improve the options for people when they reach retirement age, and many have said to me that people feel as if they're left on their own at that crucial time that they retire. But we need to go further, and in July, the Chancellor asked me to lead the first phase of the Pensions Review. I would like to thank all of you in this room who contributed to our Call for Evidence, especially given the short timeframe of our consultation.
The consultation closed last week and asked questions relating to; DC and LGPS funds, driving further investment in the UK economy, scale and consolidation and driving a shift to value. We were delighted to receive over 100 responses, and it will come as no surprise that many of the themes that you'll be discussing today have come through in those responses.
We are putting together our proposals, taking into consideration the consultation responses and the stakeholder engagement we have been doing over the last few months, and we will publish an interim report in the autumn with the full recommendations from phase one to be published next year.
It is essential to overcome the barriers to increasing pension fund investment in UK productive assets to support our capital markets, which in turn will drive growth in our economy and improve the retirement outcomes for future pensioners. I welcome the discussion on pension fund investments in infrastructure and illiquid assets that you will be having today, and the work that the ABI and its members are doing on this subject. Understanding the barriers that prevent DC schemes from investing more in these assets is crucial to the government's reform agenda.
I would also like to thank the PPI for publishing their report today 'Pension Scheme assets a deep dive into infrastructure'. I was very pleased to read in the report that investment in infrastructure has been developing over the last five years. However, the proportion of infrastructure assets held by pension schemes is still a small minority, and DC schemes need to achieve greater scale and management capabilities to ensure infrastructure assets are a cost-effective component to their investment strategies. The PPI analysis underlines that we can collectively do more to drive this trend further, and I'm grateful for them, once again, for producing analysis and building our evidence base to support change.
The Review is also exploring ways to drive greater scale and consolidation and working closely with employers, advisors, Trustees and pension providers on ways we can incentivise much greater competition on the basis of Pension returns, rather than purely cost in the DC market. On LGPS, I want to deliver a strong and sustainable scheme by tackling fragmentation and inefficiency. This will ensure that the LGPS serves the interests of members, employers and local communities, and supports growth across the economy.
As part of the review, I also want to look at the way the current pension system operates. I want to ensure the market is well equipped to deal with the challenges of the future. So your discussion today around the Value for Money and other regulatory apparatus is a key enabler for getting this right. We want to shift the focus from price to value as a crucial part of delivering better retirement outcomes over the long term.
Separate to phase one, will be a wider phase two, which will look more widely at further long-term steps we can take to improve pension outcomes, including assessing the level of savings people need to achieve the retirement that they want. There is no accident in the sequencing here. Growth is the government's first priority, so we are prioritizing measures on pensions which can expedite growth and improve returns.
The ABI is playing a crucial role in delivering this agenda, in particular, in monitoring the investments of some of the UK's largest DC schemes, it is clear that rate of change and progress is required to reach the Mansion House complex commitment by 2030 the ABI has reported that schemes are taking enabling steps, by, for example, starting to recruit more resorts, engaging with clients as support and producing research to better understand the barriers.
The ABI is instrumental in measuring developments going forward, and I hope that we will see a significant increase of pension fund investments into growth assets across the UK. The themes of today's conference are fundamental to the pensions review, which I am leading. So, in conclusion, before you ask me some difficult questions, I want to challenge you as a collective group to continue to make changes, to drive further change. Thank you.
