Trustees handed further TPR guidance on investment strategies

The Pensions Regulator (TPR) has published updated defined contribution investment guidance highlighting changes to the way trustees will present their statement of investment principles (SIP) in the future.

The guidance, published today (27 June), explains that trustees must make their SIP available online from October 2019, free of charge.

Additionally, from October 2020, trustees must produce an implementation report, which will outline how the trustees have followed and acted on the investment policies detailed in the SIP.

Following the guidelines’ publication, Pensions Minister Guy Opperman welcomed the update and said that pension schemes “have a significant part to play in tackling the climate emergency”.

He continued: “They should be thinking about how they can meet the long-term interests of their members by driving new investment in important sectors of the economy – helping to deliver sustainable environments, jobs and communities.

“I welcome TPR’s updated guidance which follows the government’s game-changing regulations clarifying and strengthening pension scheme trustees’ environmental, social and governance (ESG) responsibilities.”

TPR said that the SIP must include detailed of trustees’ policies on a number of aspects of their DC investment strategy.

This includes financially material considerations, such as on ESG factors like climate change, and stewardship of investments, such as exercising rights and activities related to the investments.

It also must include the extent to which members views are considered when planning scheme investments and details of arrangements with asset managers.

TPR executive director of regulatory policy, analysis and advice, David Fairs, added: “Good governance and the management of investment risk in pensions schemes is fundamental to provide savers with a good retirement.

“Climate change is a core financial risk which trustees will need to consider when setting out their investment strategy. They will be obliged to show how they are taking this and other financially material considerations into account over the lifespan of investments.

“This guidance provides updates as well as clarity for trustees, including considerations when planning scheme investments.”

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