Investment

Investing scheme assets is a key responsibility for trustees of occupational pension schemes in order to ensure that:

  1. in the case of a defined benefit (DB) scheme, they can pay benefits to beneficiaries as they fall due

  2. in the case of defined contribution (DC) scheme, members have a pensions pot which they can use for their retirement

Investment powers and duties of pension scheme trustees

Trustees have a wide statutory power to invest scheme assets under section 34(1) of the Pensions Act 1995 (PA 1995). The trust deed and rules of a scheme usually also confer on trustees a power to invest the scheme assets. Trustees should also ensure that they invest scheme assets in accordance with the scheme's investment power, which may be more restrictive than the statutory power to invest.

Since most trustee boards will not include individuals who are qualified and authorised to manage investments under the Financial Services and Markets Act 2000 (FSMA 2000), trustees commonly delegate their powers to make day-to-day investment decisions to a professional fund manager, as permitted by statute (PA 1995, s 34(2)).

Trustees'

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DWP to evaluate pension scheme climate disclosure regime as part of government’s modernisation of climate disclosure and transition planning in UK financial markets

As part of its efforts to modernise the UK’s sustainability reporting framework, the government has introduced three consultations intended to “unlock billions in clean energy investment”. In doing so, the government is consulting on how to implement its manifesto commitment to mandate UK-regulated financial institutions (including banks, asset managers, pension funds and insurers),  as well as FTSE 100 companies,  to develop and implement credible transition plans that align with the 1.5C goal of the Paris Agreement. The government sees transition planning as a vital part of its commitment to secure the UK’s position as the green finance capital of the world. Notably, one consultation from the Department for Energy Security and Net Zero, seeks views on how the government should implement this commitment by ensuring an orderly transition aligned with global climate goals, aiming to enhance transparency to facilitate efficient capital allocation, enabling companies to seize opportunities from the global net zero transition, and bolstering the growth and international competitiveness of the UK’s financial services industry.  In particular, the consultation from the Department for Energy Security and Net Zero indicates that during 2025, the Department for Work and Pensions (DWP) will conduct a review of the Occupational Pension Schemes (Climate Change, Governance and Reporting) Regulations 2021, SI 2021/839, utilising evidence provided by the Pensions Regulator (TPR). The DWP regards this review as a logical starting point to assess the effects of the current climate disclosure regime (put in place following the recommendations from the Taskforce on Climate-Related Financial Disclosures (TCFD)) and to consider future steps for climate change reporting. In parallel with the TCFD review, the DWP has tasked TPR with evaluating the feasibility of transition plans within pension schemes. Accordingly, TPR is organising an industry working group, including key stakeholders and major occupational pension schemes, and is set to deliver its findings to the DWP later in 2025.

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