Partner Anna Copestake comments in Pensions Expert on DWP’s clarifications that they will not dictate pension schemes’ investment strategies
In a supplementary memorandum from the DWP on the proposed climate change amendment to the pension schemes bill, the government said the new rules “are designed to confer powers capable of ensuring occupational pension schemes act and report” in line with the recommendations of the Task Force on Climate-related Financial Disclosures.
The DWP clarified that the new powers “are not intended to direct pension schemes as to how they should invest”.
Despite stating that the new requirements will cover all occupational pension schemes – including both defined benefit and defined contribution plans – the DWP now anticipates that the rules will initially be limited to larger schemes.
Nevertheless, “the fiduciary duty of trustees means that all schemes should be taking account of climate risk in an appropriate and proportionate way”, the paper stated.
Anna Copestake commented that this clarification from the DWP is “helpful and reassuring” and said that “elbowing large schemes in the right direction is a good starting place”.
However, she expressed reservations about the drafting of regulation-making powers, which risk being wider than the policy intent.
“If we’re not going to see any further changes via parliamentary debate then we’ll need to see what the regulations and statutory guidance say,” she said.
“It’d be great if they provided a really practical and clear framework. We need to be clear with trustees about what is expected from them, and equip them to leverage their buying power over other parts of the investment chain.”
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