DWP to make 2023 ‘the year of the trustee’
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Next year will be "the year of the trustee", secretary of state for work and pensions Thérèse Coffey has announced. Elsewhere, she said legislation on removing barriers to productive finance investment will be brought forward shortly.
New Paris alignment disclosure rules will come into force from October, with guidance being published in the spring or summer, the Department for Work and Pensions has said, and similarly, a response to new stewardship guidance is due in May or June.
New Paris alignment disclosure rules will come into force from October, with guidance being published in the spring or summer, the Department for Work and Pensions has said, and similarly, a response to new stewardship guidance is due in May or June.
'An offer' to trustees
“We are looking at how we can make 2023 the year of the trustee,” said Coffey, speaking at the Pensions and Lifetime Savings Association’s ESG Conference on Thursday. Coffey said she wants to recognise the excellent work trustees are doing, look at how to provide more support and highlight best practice.
Coffey could not speak live, but Pete Searle, policy director for private pensions and arm’s length bodies in her department, said “she recognises the great role trustees play and the pressures we and others put on them”.
There also appears to be a realisation in government that its ambitious agenda for pensions could be slowed down without adequate industry resourcing. “We really encourage people to come forward to be trustees, we’re really keen to work with people on what this might involve,” Searle said. He seemed to indicate that the government is in listening mode, saying it was “an offer” to discuss what would help trustees.
New legislation aims to increase investment in illiquids
In her speech, Coffey mentioned the government’s aim to put the £2tn in occupational pensions to use for strengthening the UK’s economy.
“We are... giving schemes greater flexibility to invest in productive finance, real assets, infrastructure and innovative businesses of tomorrow,” she said, adding: “We will bring legislation forward shortly to remove barriers that prevent schemes from investing in these assets.”
“We are... giving schemes greater flexibility to invest in productive finance, real assets, infrastructure and innovative businesses of tomorrow,” she said, adding: “We will bring legislation forward shortly to remove barriers that prevent schemes from investing in these assets.”
Paris alignment reporting from October
Coffey, who called pension funds “a superpower in the fight against climate change”, also announced that a new requirement to report against a Paris alignment metric – consulted on last year – would come into force from this October. This will be a fourth metric for those pension funds that are in scope for disclosing their climate exposure in a Taskforce on Climate-related Financial Disclosures report.
Guidance on this will be published in the spring or summer, said Searle - which could be relatively close to the implementation deadline, and Nigel Peaple, director of policy at the PLSA, pointed out that it will be easier for schemes to comply if they are given more time. “The sooner you are able to come out with something, the easier it is for us with complying,” he noted.
‘Trustees should show their muscles’
The consultation last year included a section on new stewardship guidance, and Searle said a consultation response on this will also be published around May or June this year. He added that it was not yet decided when requirements would come into effect, “but we’re ambitious to get this into force sooner rather than later”.
The DWP is keen on trustees showing “the muscle they have got” and be more assertive with asset managers, he said.
Last year, the department created the Occupational Pensions and Stewardship Council to promote this view. The Council wrote to asset managers in December, with pensions minister Guy Opperman also sending a letter in support. “We are currently analysing responses to that letter. We will come out with a response in due course,” said Searle.
Will the narrative on fossil fuels change because of Russia?
Pension funds have had to deal with a slew of new legislation and regulations over the past few years, many around climate change. However, there are now concerns among investors that the conflict in Ukraine will lead the UK to increase its oil and gas production and reconsider fracking, with many wondering where a policy U-turn on climate would leave pension funds. Speakers at previous conference sessions had also warned that interested parties were trying to influence the narrative in favour of fossil fuels.
Searle said he does not see any change in the government’s long-term ambitions, although there could be tweaks in the shorter term.
“I'd say right now, it’s a bit of a hiatus, who knows how long the current situation will go on for, potentially for quite a long time. The economic fallout could be extensive, and there is a question about our energy supplies,” he noted.
“I'd say right now, it’s a bit of a hiatus, who knows how long the current situation will go on for, potentially for quite a long time. The economic fallout could be extensive, and there is a question about our energy supplies,” he noted.
However, “the government is absolutely committed to Paris alignment” over the medium and long term. “It might be that something might happen in the very short term that might change the path towards that,” he said, but “I sincerely doubt there would be any desire to move away from that aspiration”.
