Pensions Weekly Update – 10 February 2021

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Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes, which you might have missed, with links for further information.

The Investment Consultants Sustainability Working Group (ICSWG) is a collaboration of 17 advisers, formed in 2020 to “support and accelerate sustainable investment initiatives in the UK”. It has published a guide for pension trustees, setting out five themes against which trustees should expect their investment consultants to demonstrate their climate competency: (1) firmwide climate expertise and commitment, (2) individual consultant climate expertise, (3) tools and software (to support climate-related risk assessment and monitoring), (4) thought leadership and policy advocacy, and (5) assessment of investment managers and engagement with them. ShareAction, The Pensions Regulator (TPR) and the United Nations Principles for Responsible Investment have also inputted into the guide.
TPR has published the results of its annual survey of defined contribution schemes, which addressed a number of governance issues. Broadly speaking, larger schemes are more compliant than smaller schemes (which is consistent with TPR’s previous findings). 42% of ongoing, non-master trust schemes have considered winding-up – the time and cost of running the scheme was the main reason cited. Only 43% of schemes with more than 100 members took climate change into account when formulating their investment strategy (but 95% of members overall were in a scheme that took climate change into account, as the majority are in master trust schemes). TPR says that climate change should receive “greater attention”.
We are still waiting for Royal Assent of the pension schemes bill, when it will become the Pension Schemes Act 2021. If you would like to read more about the changes that the Pension Schemes Act 2021 will bring, including the new criminal sanctions, an expanded notifiable events regime and the ability for TPR to issue civil fines of up to £1 million, please see our detailed communication.
Did you see last week’s 30-second #PensionsTensions video on the subject of ESG? Look out for this week’s video on the pension schemes bill on our social media platforms.

If you would like specific advice on any of these issues, or on anything else, please contact a member of our Pensions team.