Government and industry bodies have made it a busy late summer for pension managers, trustees and members with a series of announcements on updates and plans for the industry from the Treasury, The Pensions Regulator and the Pension Protection Fund. To find out more, read on…
Government launches “landmark” pension review
The Chancellor Rachel Reeves has launched a “landmark review” of the pensions industry with the aim of boosting investment, increasing pension pots and tackling waste in the pensions system.
According to Treasury officials, under plans unveiled by the new Chancellor, billions of pounds of investment could be unlocked in the UK economy from defined contribution (DC) schemes alone.
DC schemes will be managing around £800 billion in assets by the end of the decade and the review will explore ways to increase their investment by moving into productive assets.
The Treasury says even a one percentage point shift of assets could mean £8 billion of new investment to grow the economy and build infrastructure by the end of the decade.
Pensions Minister Emma Reynolds says: “Over the next few months the review will focus on identifying any further actions to drive investment that could be taken forward in the Pension Schemes Bill before then exploring long-term challenges to ensure our pensions system is fit for the future.
“There is so much untapped potential in our pensions markets, with an industry worth around £2 trillion. The measures we have already set out in our Pension Schemes Bill will help drive higher investment and a better deal for our future pensioners.”
The first stage of the review will examine actions to support greater productive investment and better retirement outcomes, including through further consolidation and encouraging at-scale schemes to increase returns through broader investment strategies, according to officials.
TPR calls on trustees to help shape VFM framework
The Pensions Regulator is urging trustees of workplace defined contribution (DC) pensions schemes, together with the wider pensions industry to help shape the introduction of the new value for money (VFM) framework.
The Pensions Regulator (TPR), the Financial Conduct Authority (FCA) and the Department for Work and Pensions (DWP) are working in partnership to develop a framework to improve the value schemes deliver for savers and enabling comparisons to be made across the defined contribution pension landscape including contract-based and trust-based schemes.
The call by TPR comes as the FCA launches its consultation for contract-based schemes ahead of the DWP introducing equivalent legislation for trust-based schemes in the upcoming Pension Schemes Bill. The FCA consultation will run until 17 October.
TPR Chief Executive, Nausicaa Delfas, says: This is a great opportunity for the pensions industry to help to transform pension saving for millions, and to deliver greater value for their retirement.”
“We want every pension saver to get value for money from their pensions. That means good investment returns, and high-quality services, for a competitive price.
TPR Interim Executive Director of Strategy, Policy and Analysis, Nina Blackett, says: “We encourage trustees of trust-based schemes to respond to the technical detail of the consultation, with a view to ensuring the final framework can be applied effectively to trust-based schemes.”
PPF reports sustainability strategy progress
The Pension Protection Fund (PPF) is highlighting further progress on how the organisation responds to climate-related risks and opportunities in line with recommendations from the Task Force on Climate-related Financial Disclosures (TCFD).
In its fourth annual Climate Change report, the PPF says there has been further progress implementing its strategy to “lead by example on sustainability” across the pension fund industry, with “a focus on improved understanding of climate risk, especially from private markets”.
Key highlights include:
- 60 per cent of portfolio companies in private markets now covered by carbon data, up from 23 per cent in 2022.
- 90 per cent of companies on its Climate Watchlist reported their environmental impact data to global environmental impact disclosure system CDP in 2023, up from 84 per cent in 2022.
- 67 per cent of the PPF categorised as ‘Net Zero, Aligned, Aligning or Committed to Align’ with the Paris Agreement, up from 59 per cent since the 2020 baseline.
PPF also highlighted its ongoing commitment to prioritise engagement with managers and portfolio companies to meet sustainability objectives.
Claire Curtin, Head of PPF ESG and Sustainability, says: “It remains one of our key priorities for the business to respond to and manage risks that arise from climate change. To do this we need to keep pushing for better information that will help us paint a more accurate picture of emissions across the Fund.”
To discuss any issues facing your business or pension scheme, contact MHM:
Tel: 01423 229029
Email: info@mhmpensions.co.uk
