Pensions: what’s new this week - 27 February 2023
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Welcome to your weekly update from the Allen & Overy Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.
This week we cover topics including: TPR campaign on climate change and ESG reporting; FCA asks trustees to report suspicious transfers; SPP guide on ESG; PASA paper on eAdmin.
TPR campaign on climate change and ESG reporting
The Pensions Regulator (TPR) has launched a campaign targeted at trustee compliance with climate change and environmental, social and governance (ESG) reporting duties. TPR is warning schemes that enforcement action may be taken where failings are identified.
As part of the campaign, TPR will email schemes to inform them that it is analysing scheme return data to check that they have made proper climate change and ESG disclosures in their statements of investment principles (SIPs) and implementation statements. A review of a cross-section of SIPs and implementation statements will follow in the summer. The outcome of TPR’s review will be shared with the industry to highlight good practice. TPR points to not providing valid website addresses for SIPs and implementation statements as a common failing by schemes.
Authorised schemes and those with relevant assets of GBP1 billion or more must include a link to an annual climate change (or TCFD) report in their scheme return. TPR will issue a statement on TCFD reports in the spring.
FCA asks trustees to report suspicious transfers
The Financial Conduct Authority (FCA) has published a statement asking pension schemes to report to them if they have identified suspicious transfers. This may be where a number of red or amber flags have been identified or a transfer has been refused. The statement gives a list of situations which the FCA would like to be informed of, for example individuals providing unauthorised advice on a transfer or an increased number of transfers using the same adviser.
The FCA gives guidance on assessing whether a situation is suspicious, for example flagging the need to be aware of ‘factory gating’ (targeting specific workers in a situation which may make them more interested in transferring their pension, for example an employer insolvency), but noting that transfers to a receiving scheme linked to a new employer following a corporate transaction are not necessarily a cause for concern.
There is no legal obligation to inform the FCA where suspicious transfers arise, though TPR does include informing the FCA as an action in its guidance on pension scams.
SPP guide on ESG
The Society of Pension Professionals (SPP) has published a guide on ESG requirements and practical steps for trustees when considering ESG issues in scheme investment. The guide explains different investment structures and gives a high level overview of legal obligations in relation to ESG. It then sets out a proposed framework for how trustees could consider ESG and integrate it into their investment strategy. This is divided into three steps, with practical tips for each stage: (i) setting beliefs and objectives; (ii) engaging with advisers; and (iii) engaging with investment managers.
PASA paper on eAdmin
The Pensions Administration Standards Association (PASA) has published a paper on the use of ‘eAdmin’ and how technology can be leveraged for a ‘saver-centric experience’. The paper considers how eAdmin can be utilised in the areas of data, automation and member portals/apps. It sets out guidance on how technology can and should be used in each area and includes information on what schemes are doing currently (based on interviews with various industry stakeholders) and checklists of ‘what good looks like’ to compare against existing scheme processes.