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The Actuary The magazine of the Institute & Faculty of Actuaries

TPR unveils new investment guidance

The Pensions Regulator (TPR) has today published updated investment guidance for defined contribution (DC) schemes looking to comply with new legal requirements.

New ESG guidance for DC schemes ©iStock
New ESG guidance for DC schemes ©iStock

The guidance incorporates regulation coming into force in October 2019 and 2020, including an obligation to consider environmental, social and governance (ESG) factors.

Trustees will be required to publish a statement of investment principles (SIP) online and free of charge from October, and an implementation report 12 months later.

The SIP must include policies on financially material ESG considerations, asset manager arrangements, investment stewardship, and the member views that have been considered.

“Pension schemes have a significant part to play in tackling the climate emergency," minister for pensions and financial inclusion, Guy Opperman, said.

"They should be thinking about how they can meet the long-term interests of their members by driving investment, helping deliver sustainable environments, jobs and communities.

“I welcome TPR’s updated guidance which follows the government’s game-changing regulations clarifying and strengthening pension scheme trustees’ ESG responsibilities.”

The guidance also provides explanations for what is meant by financial material considerations, stewardship and gives information about preparing an implementation statement.

This comes after the Pensions and Lifetime Savings Association (PLSA) last week published a stewardship guide of its own to help pension funds comply with ESG requirements.

TPR executive director, David Fairs, said: “Climate change is a core financial risk which trustees will need to consider when setting out their investment strategy.

"They will be obliged to show how they are taking this and other financially material considerations into account over the lifespan of investments.

“This guidance provides updates as well as clarity for trustees, including considerations when planning scheme investments.”

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