Spring Statement: Hymans Robertson comments

Commenting on today’s Spring Statement and the lack of update regarding the DWP Pensions Investment Review, Calum Cooper, Head of Pensions Policy Innovation, Hymans Robertson says:

“The lack of clarity from the Chancellor in today’s Spring Statement around pensions – not least the lack of clarity around the second stage of the DWP Pensions Investment Review is disappointing yet unsurprising. As an industry, we need a clear timetable with detailed terms of reference, as well as a firm start date, to ensure that the energy and momentum of this vital initiative continues. With each passing month, and a continued cost of living crisis and rising costs, further challenges are being placed on individuals to ensure their ability to achieve a good retirement. 
 
"With dashboards making inadequacy transparent, and the State Pension Age Review in 2026: the government may feel the pensions platform is on fire. But the Spring Statement also laid bare our immense fiscal challenges. The government will be anxious about running into Phase 2 of the Pensions Investment Review. But they needn’t be; through working with the pensions industry and understanding the needs of members, a better future is possible. The focus should be using Phase 2 as a growth catalyst that people across the country feel good about.  A package of pensions measures that are attractive to savers, employers and government is the perfect solution. One that balances the challenges of today with later life financial independence. This is what Phase 2 will be able to deliver, and in tandem this could dovetail with the state pension age review, as part of a holistic approach to better pensions.”

Commenting on today’s Spring Statement and the reaction from the gilt market, Chris Arcari, Head of Capital Markets, Hymans Robertson says: 

“As announced in today's Spring Statement, the Chancellor has reaffirmed its commitment to the fiscal rules announced in the Autumn Budget. The announcement of a £14bn package to repair UK public finances after weak growth, higher inflation, and high borrowing costs hit the fiscal position after the Autumn budget will restore the already thin headroom but leaves limited room for manoeuvre.

“The announced spending cuts and efficiency measures indicate a commitment to fiscal responsibility. However, the increase in defence spending adds to expenditures, which may offset some of the savings from other cuts. No new tax increases were announced in the Spring Statement. However, measures to tackle tax evasion are expected to raise an additional £1bn. The absence of new tax hikes will further pressure the government to rely on spending cuts and efficiency measures to manage the current fiscal position.

“The OBR has today significantly downgraded its UK economic growth forecasts for 2025 whilst upgrading the longer-term forecasts, projecting stronger growth beyond 2026 and improved tax receipts. The upgrade is primarily attributed to the governments planning reforms aimed at increasing housebuilding. These reforms are projected to elevate housebuilding to its highest level for 40 years by 2029/30 contributing to an additional 0.2% to GDP by the end of the decade. This positive fiscal outlook has provided the government with flexibility to maintain fiscal headroom of ~9.9bn.”

“The DMO (Debt Management Office) has announced a total gilt issuance of £299.2 bn for the 2025/26 fiscal year, slightly below the anticipated £305-310bn. Longer dated issuance has been notably reduced (to 13.4%) of total issuance. The decision to shift issuance toward shorter maturities addresses current market dynamics which have seen pressure on the long end of the curve.

“Ten-year gilt yields initially increased while the Chancellor spoke but have since fallen and are currently lower on the day responding to the shorter and  lower-than-expected gilt sales announced”