Time for pensions to act on climate change

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The DWP has written a letter to the Pensions Regulator telling it to set out its climate change strategy.

The letter is a little awkward as it tries to shoehorn the need for this strategy into TPR’s core objectives.  It’s clear that there is very little alignment between what TPR has been tasked to do and what Big Government is now saying.

If our funded pensions are to play a part in hitting global sustainability targets then we need a joined up approach that ensures that pension funds – whether collective and regulated by tPR or retail and regulated by the FCA work to the same purpose and are subject to the same scrutiny.

This means that the Treasury must be requiring the FCA to work with tPR and the DWP must do the same with rPR.

It also means that the Regulators are going to have to change. I do not know anyone in senior roles within the Pensions Regulator who has shown any expertise in climate change strategy. 

That is because the core objectives were never about pensions playing a part in redeeming the planet from global warming. TPR’s core objectives are going to have to  change too.

Three Core objectives of the Pensions Regulator?

  1. To protect the benefits under occupational pension schemes of, or in respect of, members of such schemes

  2. To reduce the risk of situations arising which may lead to compensation being payable from the Pension Protection Fund

  3. To promote, and to improve understanding of, the good administration of work-based pension schemes

It could be argued that diverting resources to create a climate change strategy works against objectives one and two. The third objective is chosen by the DWP as closest aligned to what it wants TPR to do.

Specifically DWP is giving tPR two years (till December 2021) to come up with an adaptation report covering

  • financial risks and opportunities from climate change that impact the Regulator and trust-based occupational pension schemes

  • how the Regulator and those running pension schemes are responding to and managing the financial risks and opportunities associated with climate change

  • the Regulator’s policy and regulatory approach to adapting to climate change

These last three bullets are clear, vivid and real and let’s hope that within the two year timeframe, Charles Counsell and his executive can deliver not only intentions but “adaptions”.  I , and I hope big Government,  would like to see a climate change strategy in place and operating in unison with the FCA by the end of next year.

The Law is changing

The amendment to the Pension Schemes Bill,inserted by the DWP last week followed a meeting between Mark Carney and Theresa Coffey – this is code for “Big Government” and justification for a radical intervention that gives DWP the power to force change.

The DWP have the bill to make this immediate law but the Treasury must be in lockstep so that TPR and the FCA are one and what is sauce for trustees is sauce forIGCs and GAAs. Indeed no part of the funded pension system should be excluded from this climate change strategy.

Since the original amendment, Ros Altmann has made a further amendment which I think is sensible.

The amendment would place a reporting duty on the Pensions Regulator to publish statements of investment principles (SIPs) and create a publicly accessible register so that all scheme members could check their scheme’s investment strategy.

This amendment would be important for everyone who has a pension or a pension pot and could equally apply to people’s investments in SIPPs and contract  based workplace pensions. Only where individuals chose to directly invest their pensions without the use of funds, would such reporting not be useful.

People are changing

I cannot buy meat where wework , many university canteens do not stock red-meat. This is not out of pity to animals but because we know that farming animals for meat has a very high carbon footprint.

I am changing as a result of my children. I am worrying about owning a car, even the exhaust from my boat. We are all waking up to our own personal responsibilities.

I want to know that my money is being managed so that it helps  reduce global warning. I don’t pretend to be an expert but I will look at the Chair’s Statements of the IGCs with particular interest about what they tell me about the IGCs climate change strategy.

The preferred strategy proposed  by DWP for pension schemes  is outlined in this blog

I hope that by the time the PLSA get to Edinburgh for their investment conference next month they will have changed their minds too, accepting, as tPR must accept, that there is need for radical change.

I hope that the FCA will change too and adopt what the DWP propose and TPR enforce. I hope that the 2020-21 IGC Chair statements will report that contract based pensions are changing just as occupational schemes have changed.

I hope that Ros Altmann’s amendment is adopted.

Pension Action

It’s been over five years since I first heard Catherine Howard talk about engaging people about retirement planning by talking to them about how they were invested. I remember the meeting which was in the Bridewell Centre, and I remember Steve Webb supporting what was said.

Since then we have seen the initial work carried out by Share Action validated by organisations such as Ignition House, Investec and Quietroom. There is no doubt in my mind that if we can get people to understand that their pension savings are actually invested, that they will take as great an interest in their pensions as what they cram down their gullets.

People are changing their behaviours because of climate change and it’s not just “tree hugging” any more. Climate change is different, it is the single greatest threat facing our retirements and our children and grandchildren’s futures.

We need the visionary work of Share Action, Minerva, PIRC and the other agencies that pioneered thinking on climate change strategies in pensions not just to be recognised but adopted.

This means genuine change.

The changes that the DWP have in mind will mean that tPR will have to change and so the FCA. It will mean that trustees and IGCs will have to change too. Finally it means that we – the pension savers, must accept that change and indeed welcome it.

Without popular support, none of this change is going to happen. But with popular support, pensions can make a real difference. Which is why I’m right behind DWP on this, for all the headwinds that this change will encounter.


and we still are


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Time for pensions to act on climate change

  1. DaveC says:

    Surely if the world has genuinely turned it’s attention to these things, then they wouldn’t exist for pensions to invest into?

    This strikes me as a pensions raid by government, rather than borrow to pay for green infrastructure, or pay subsidies/offer tax incentives as they have done, they can now flood the green energy market with institutional investor money seeking any old yield.

    I’m assuming this won’t slip into the SIPP so I’m happy for now.

    If there are businesses government believe are so bad for our society’s future, I shouldn’t be investing in them, then they shouldn’t be doing business. It’s that simple.

  2. henry tapper says:

    Dave – as I mention – self-investors can judge for themselves, but most of us rely on fund managers to invest for us and I’m afraid they don’t always provide stewardship of our money that we can reasonably expect.

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