The House of Lords has rejected government proposals to grant ministers reserve power to mandate pension fund investments in private assets. Lawmakers voted 217 to 113 against including the controversial measure in a pension reform bill. The defeat represents a significant setback for government plans to redirect pension savings into private markets to stimulate economic growth.

The Conservative government had framed pension reform as central to its economic strategy, following the Mansion House Accord where 17 largest pension providers voluntarily committed to investing at least 10% in private markets by 2030. Ministers hoped these measures, combined with pension "megafunds" of at least £25bn, would channel £50bn into UK scale-up companies, infrastructure and property.

Opposition to the "mandation" powers centered on concerns they would override professional judgment and potentially expose savers to risky assets. Baroness Sharon Bowles argued against "a power grab that no government should have," while shadow work pensions secretary Helen Whately warned against treating pensions as "pots of cash for whatever government of the day to spend on projects." The Conservative party has vowed to scrap the provision if elected.