This week in pensions: 23-27 January

Climate change has becoming more and more ingrained into the public consciousness recently with warnings about the severity of the problem being reported regularly in mainstream news and the high profile cases of just stop oil protesters attacking various works of art last year.

The pensions industry is, of course, no exception to the obligation of helping the fight against climate change and this week saw a number of encouraging instances of the industry combatting this issue.

For instance, Nest and Cushon announced that they were inviting fund managers to share views on ways in which the two pension schemes can invest in natural capital with an initial focus on forestry and the announcement that Railpen had acquired Bracks solar farm, a solar project in Cambridgeshire.

Smart also announced that they were doing their bit in the fight against climate change by launching three new sustainable lifestyle strategies which will fully invest in funds that positively contribute to the planet and society, investing in areas such as renewable energy projects, clean water and healthcare, according to the provider.

This week also saw the Greater Manchester Pension Fund (GMPF) committing a further £100m into Gresham House’s Sustainable Infrastructure (BSIF) strategy to help accelerate the deployment of new solutions to address “key” environmental and societal challenges in the North West.

However, concerns remain that climate change is not being considered a priority, as LCP described the lack of attention paid to the issue in The Pension Regulator’s (TPR) new Defined Benefit (DB) Funding Code as a “glaring omission” that could lead to trustees and schemes not giving the issue the “priority it deserves”.

This was not the only warning that LCP issued this week as it also stated that the new funding rules for DB pension schemes could cost British industry up to £34bn based on the regulator’s official estimates.

Also this week, TPR made the announcement that the defined contribution (DC) market has been subject to further concentration over the past year revealing that the total number of non-micro schemes had declined by 11 per cent.

Funding improvements have also continued in the DB side of the industry, as industry research revealed that time to buyout for FTSE 350 DB pension schemes had halved over 2022, falling from 10.5 years at the start of the year to 5.1 at the end.

This week also marked the government’s reaffirmed its commitment to implementing the 2017 auto-enrolment reforms in the “mid-2020s”, although it rejected calls to share a timetable for the implementation of the reforms.

Industry reaction to the government response has been mixed, as whilst some industry experts acknowledged that the impact of the cost-of-living has made prioritising auto-enrolment reforms more challenging, others branded the response as "bleak", "disappointing", and potentially "dangerous".

This was not the only update to AE, as the government also confirmed that the automatic enrolment thresholds would be maintained at their 2022/23 levels for 2023/24.

Whilst this week was very busy for the industry for a number of reasons, it was very encouraging to see strides being made to tackle the biggest issue of our day and the pension industry being a shining example for environmental responsibility.

    Share Story:

Recent Stories

Sustainable investing for DC schemes
Laura Blows discusses sustainable investing for defined contribution plans with BlackRock head of UK & MEA global consultant relations, Claire Felgate, in Pensions Age’s latest video interview

Spotlight on Emerging Markets
Francesca Fabrizi talks emerging markets with Polar Capital’s head of Emerging Markets & Asia, Jorry Nøddekær, exploring the opportunities for pension funds in the current global setting

Sustainable Investing
Laura Blows speaks to Royal London Asset Management sustainable fund manager, George Crowdy, about global sustainable equity investing
The latest in multi-asset credit
Laura Blows discusses the high-yield market and multi asset credit with Royal London Asset Management senior fund manager, Khuram Sharih