The Pensions Regulator (TPR) will work with industry
stakeholders, advisers and professional bodies to develop and
test a voluntary net zero transition plan template fit for
occupational pension schemes, drawing on the work of the UK
Transition Plan Taskforce (TPT).
Transition plans can help organisations, including occupational
pension schemes, prepare for the government's goal of
transitioning the UK to a net zero nature-positive economy by
2050.
Developing them is a proactive step trustees can take to help
their schemes manage transition risks, such as investments in
fossil fuels or other high-carbon industries losing value or the
impact of market volatility. They can also help trustees
capitalise on the investment opportunities and promote
sustainable investment.
However, there is no one transition plan template designed for
and tailored to occupational pension schemes and TPR has
announced it is working to create one with industry's help
through a transition plan working group.
Lyne, TPR's Interim Executive
Director of Market Oversight and Chair of the planned working
group, said: "Sustainability initiatives should improve
investment governance practices and help schemes make good
long-term strategic decisions.
"That is why we plan to work with industry in advance of any
legislation to make sure we deliver a transition plan template
made by industry for industry and that provides high standards of
stewardship and helps mitigate financially material systemic
risks."
Although not currently a mandatory requirement, transition plans
have the potential to catalyse change and help shape investment
decisions in the interests of savers.
Raising trustee awareness of transition plans and their benefits
has been an area of ongoing focus for TPR.
Mandating transition plans aligned to the Paris Agreement goal of
limiting global temperature rises to 1.5C was included in the
Labour Party's pre-election manifesto.
TPR said the ultimate template will be based on the framework and
guidance developed by the TPT and will be presented to the
Department for Work and Pensions this year.
Notes to editors
- The working group's purpose will be to develop and test a
Transition Plan template suitable for trust-based occupational
pension schemes, based on the framework and guidance by the UK
Transition Plan Taskforce. The ultimate template will be capable
of integrating climate, nature, societal factors and adaptation
in a way that complements and supports the UK Sustainable
Disclosure Requirement and associated Sustainable Reporting
Standard. Members of the group will be appointed by the group's
Chair in due course, but membership is expected to include
trustees, advisers and representatives of professional bodies.
- TPR acknowledges addressing climate-related risks and
promoting ESG integration requires a joined-up regulatory
approach and will continue to work closely with other regulators,
including the Financial Conduct Authority, Department for Work
and Pensions, and HM Treasury, to ensure consistency and
alignment in expectations and guidance for pension schemes.
- To further develop its capacity in understanding and managing
ESG risks, TPR has joined the world's largest sustainability
initiative, the United Nations Global Compact. The compact is
made up of more than 25,000 participants from over 160 countries
and aims to create a sustainable and inclusive global economy by
encouraging business and organisations to adopt responsible
practices. Membership provides TPR with access to training, tools
and resources on ESG topics so it can share emerging good
practice and has the expertise to continue to support trustees in
considering and mitigating climate and nature-related financial
risks.
- TPR is also increasing its climate and sustainability team,
having already appointed two new ESG Delivery Leads, and an ESG
Policy Analyst currently being recruited.
- TPR is the regulator of work-based pension schemes in the UK.
It protects savers' money, helps to enhance the pensions market
and supports innovation in the interests of savers. Our statutory
objectives are to:
- protect members' benefits
- reduce the risk of calls on the Pension Protection Fund
- promote, and improve understanding of, the good
administration of work-based pension schemes
- maximise employer compliance with automatic enrolment
duties
- minimise any adverse impact on the sustainable growth of
an employer (in relation to the exercise of the regulator's
functions under Part 3 of the Pensions Act 2004 only)
