Reports today that the Government is intending to mandate pension schemes to invest in the UK if the Mansion House Accord does not prove strong enough to change behaviour would be “heavy-handed according to the non-partisan, independent investment system think tank, New Capital Consensus. It goes on to add it “creates concerns beyond the political and economic wisdom of government mandation”, in an article published on is website, newcapitalconsensus.org.
Instead, New Capital Consensus offers a sensible middle way between the industry’s light touch voluntarist “Comply or Explain” approach and the threat of mandation if insufficient progress is made.
Setting out what New Capital Consensus calls a “Explain the Comply” regime, Policy Director, Dan Hedley says:
“The Mansion House Accord marks a major turning point for the UK pensions industry promising better returns for pension savers and a crucial injection of capital for the UK economy, supporting growth, innovation, and job creation.
“However, for the Accord to truly deliver on its ambitions, it must be governed by a supervision regime that incentivises genuine change rather than superficial compliance. The ‘Comply or Explain’ approach, long a fixture in UK regulation, falls short in this context—and risks turning the Accord into a “dog that doesn’t bark” when the country needs a guard-dog for productivity and pension reform.”
Hedley sets out an alternative ‘Explain Then Comply’ regime, comprising:
- Mandatory explanation: All DC Default Funds, not just volunteers, would be required to articulate their planned route toward compliance.
- Shared learning: Early adopters would share their methodologies, creating a knowledge base for others and fostering industry-wide improvement.
- Ongoing engagement: Compliance becomes a continuous improvement process, rather than a one-off event.
- Collaborative supervision: A Mansion House Council or similar body to assess progress, share best practices, and help funds develop effective approaches.
“This approach encourages transparency, collaboration, and sustained progress,” says Hedley, “rather than box-ticking or reputational window-dressing. It also creates a forum for ongoing policy refinement, aligning Mansion House with related initiatives and adapting to future legislative changes.”
“In short, it’s time for the Accord to become the “dog that barks”—a true guard-dog for UK productivity and prosperity,” Hedley concludes.
