MPs table Pension Schemes Bill amendments

Members of Parliament have tabled Pension Schemes Bill amendments that include requiring schemes report their climate change strategies and to introduce a Pension Schemes Commission.

Amendments which would require The Pensions Regulator to “promote the membership of defined benefit schemes” and publish legal guidance outlining new offences introduced by the act, and the government to conduct a review of the effects of the tapered annual allowance were also tabled.

The proposal on declaring climate strategies, tabled by the Department for Work and Pensions (DWP), calls for information on environmental risks and climate change related opportunities to be made available free of charge, while failure to comply with the requirements could result in a penalty of £50,000.

The Pension Schemes Commission and the review into the effects of the tapered annual allowance would be required to be established within six months of the passing of the Bill, if the amendments are added.

If passed, the Pension Schemes Commission would be required to conduct a strategic review of public policy regarding pension schemes and make recommendations, while the Secretary of State would have to respond to reports from the commission with a written statement laid before each House of Parliament.

The call for further environmental transparency comes after Work and Pensions Secretary, Therese Coffey, and Bank of England Governor, Mark Carney, joined forces to call for pension schemes to do more to mitigate the financial risks of climate change.

Work and Pensions Secretary, Therese Coffey said: “Pension schemes shouldn’t be dragging their heels when it comes to their climate change strategy. We’ve already introduced regulations that require pension trustees to set out their policy on climate change, but now we’re taking things a step further.

“I want the UK to continue leading the way on the climate emergency defining the twenty-first century.”

However, Pensions and Lifetime Savings Association head of DB, LGPS and standards, Joe Dabrowski, argued that elements of the amendments went “significantly beyond” current disclosure requirements, adding that this would give government bodies “unprecedented new powers” to interfere with private sector schemes’ investment strategies.

“If that’s the case it would set a dangerous precedent and be wholly inappropriate. Nothing should cut across schemes’ fiduciary duty and freedom to invest in members’ best interests – and this will vary scheme by scheme. We urge the government to redraft the amendments and clarify its intent and respect for this principle.”

Coffey and Carney met last week to discuss the work of the Taskforce on Climate-related Financial Disclosures.

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