Cumbo asks “can pension schemes invest for social good and keep TPR happy?”


Rishi Sunak is keen to see pension schemes invest to get Britain to its climate change commitments. This week the Treasury set out its financial services policy  which ended with a promise

to encourage investment in long-term illiquid assets, such as infrastructure and venture capital, the Chancellor announced his ambition to have the UK’s first Long-Term Asset Fund (LTAF) launch within a year.

We know the DWP are taking steps to enable DC schemes to invest in such a fund and have issued a consultation on how to create larger DC schemes which can invest in less liquid funds. The DWP is also looking to tweak the charge cap rules to enable  notoriously expensive illiquid asset classes to be used within the charge cap. Success for DC schemes is far from certain as liquidity in DC is a lot less certain (who knows when people will want their money?). Successfully  embedding long term illiquid investment in collective defined benefit schemes sounds easier but will trustees commit to long term investment strategies if they are being regulated using short term measures?

Josephine Cumbo took to the tweets, to quiz the Pensions Regulator on how it might be resolving the seeming conflict between improving member security while supporting the Chancellor’s green objectives.


Whether the Government wants to get DC or DB pensions investing in the LTAF , it is going to need to provide different messaging about the duration of pension liabilities. If trustees are planning to buy-out or transfer assets into a superfund then they are going to need assurance that any investment in  the LTAF will be transferrable to whoever buys their liabilities out. Assets will need to be transferred in specie and its far from clear whether commercial organizations will want assets within the LTAF wrapper or indeed the assets at all.

Ironically, those DB schemes not looking to get bought out but which are either open to new members or future accrual  are likely to be subject to the Pension Regulator’s “bespoke scheme guidance”. There is considerable concern in and outside parliament that these bespoke rules offer little more opportunity to invest in “patient capital” than the TPR’s fast track. This is why there are attempts being made to carve schemes that want to stay open from being subject to the strictures of the DB funding code. By escaping “bespoke”, these schemes  would be much more free to invest in the LTAF (it is supposed).

Josephine Cumbo’s questions pose salient challenges for TPR’s DB funding code as well as to issues of member security they address directly. It is good to see invites coming out of TPR to attend briefings and even one on one meetings, this suggests that what appeared to be a slam dunk DB funding code consultation, may yet offer hope to schemes with longer time horizons to do as Rishi Sunak wants them to.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Cumbo asks “can pension schemes invest for social good and keep TPR happy?”

  1. Ros Altmann says:

    IS there a clash looming between DWP and HMT? If pensions are to invest in illiquid long-term assets, with potential to boost growth and deliver much better returns than gilts, the charge cap and daily pricing will need to be reconsidered for DC schemes and tPR funding code needs to be rethought in terms of ‘risk’ management. Managing pension risks is about balancing asset classes in a diversified portfolio, not just aiming to remove all risks other than in gilts (which clearly do still have risk relative to pension liabilities given the negative returns and lack of matching gilts)

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