Baroness Altmann (Non-Afl)

My Lords, I agree with every word that the noble Lord, Lord Vaux, has just said. I declare my interests as a non-executive director of a pension administration company and a board adviser to a master trust. I support all the amendments in this group, but I shall speak particularly to Motion E1 so ably moved by the noble Baroness, Lady Bowles. A fiduciary obligation is one of the highest standards of duty in common law, yet this Bill would override the best judgment of trustees. Although the 5% and 10% amendment laid by the Government is welcome, it does not deal with issues such as those outlined by the noble Baroness, Lady Bowles, and the noble Lord, Lord Vaux. If trustees do not believe that the case for, for example, private assets is strong enough, they will still have to buy them or they will not be able to participate in auto-enrolment. This is not incentivisation. Incentivising financially, perhaps via tax reliefs, would change the calculation of the potential outcomes, but mandation does not do that. The dangers of mistiming are clear. A McKinsey study published in February shows that, for example, private equity is under structural strain with constrained liquidity, valuation uncertainty and returns that have been weaker. As the noble Lord, Lord Vaux, outlined, the same applies to private credit, particularly that held in open-ended fund structures. In infrastructure, we have recently seen the returns offered for solar power degraded from in line with RPI to in line with CPI, which has put international investors off some of the infrastructure opportunities in the UK. If the Government persist in their idea that closed-end funds, which are much more appropriate and have their own diversified, expertly managed portfolios of qualifying assets cannot qualify, that simply further reinforces the idea that the Government does not know best and that it is not safe for this House to authorise the Government to mandate these investments. Not all pension funds have the in-house capability to manage alternative or illiquid assets. Just being large does not give them instant expertise. Australian and Canadian funds have taken decades to build up this kind of ability. A strict time limit simply does not and cannot fit with the requirements that the Government seek to impose on pension schemes. I hope that noble Lords will stand firm in the resolve to send this back to the other place.