Fiduciary duties of pension trustees: Work and Pensions Committee issues letter to Pensions Minister

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Written by Kate Granville Smith
The fiduciary duties of pension trustees is a subject which is is engaging many trustees and advisers of pension schemes at the moment. As we reported, last month the Financial Markets Law Committee issued a useful paper on this topic.
In further developments, The Rt Hon Sir Stephen Timms MP has written in his capacity as Chair of the WPC to Paul Maynard, Pensions Minister.
committees.parliament.uk/publications/44325/documents/220225/default/
The letter dated 17 April explains that the WPC has received evidence regarding ways to clarify fiduciary duties in relation to climate change. It noted that there is a wide divergence in the way trustees were interpreting their duties in this area and that pension funds continued to invest in high emitting sectors despite the financial risks of climate change. Referring to the FMLC paper, it was noted that the paper helped highlight that there was a strong case for trustees considering climate change and other sustainability factors as ‘financial factors' in investment decision-making.
In terms of how to help trustees, the letter notes that WPC heard it would be helpful for The Pensions Regulator to issue guidance but some thought that the Government needed to go further and change the law.
The letter also touched on economic models on the impact of temperature rises used by some investment consultants as some felt that they did not reflect the findings of climate scientists.
The letter poses 5 questions:
The letter asks for a response to these questions by 1 May and we await further developments with interest.