PLSA publishes guide on trustee investment disclosure duties
The Pensions and Lifetime Savings Association (PLSA) has published guidance for trustees on the new requirements to publicly disclose their investment and responsible investment activity.
The requirements, laid out by the Department for Work and Pensions, require trustees to disclose how and to what extent their investment action over the course of the past year follows their investment intent, as set out in the scheme's Statement of Investment Principles (SIP).
The PLSA's guidance - produced by its Voting and Implementation Statement Working Group - offers step by step support for defined contribution (DC) and defined benefit (DB) trustees to produce a relevant ‘implementation statement'.
DC and hybrid schemes are required to disclose against all parts of their SIP, while DB-only schemes are required to disclose only on their voting and engagement behaviour.
The trade body's guide sets out what the legislation requires and by when, both general principles and more detailed possible considerations for trustees to produce good statements, the specific considerations around voting behaviour disclosures, and ‘top tips' for investment and responsible investment communications.
PLSA working group chairwoman and policy board member Laura Myers said: "The recent changes to the Occupational Pension Scheme Investment Regulations 2005 have put the onus on schemes to not only provide more details around how ESG considerations impact their investment decisions, but also to improve trustees' investment decision making and governance more generally.
"These new regulations require schemes to publish a SIP which sets out how trustees make strategic investment decisions and produce an annual implementation statement to illustrate how these strategic aims have been enacted in practice."
Senior policy lead of investment and stewardship Caroline Escott added: "The implementation statements are a very new discipline for trustees, and will require them to carefully consider which investment decisions and activities have or will have the greatest impact on their investment objectives.
"We believe that well-crafted, relevant and interesting disclosures will add real value to beneficiaries in understanding their scheme's investment approach, including their approach to ESG and stewardship issues."
She continued: "With policymakers and the public increasingly interested in how schemes invest, we hope that our guidance will provide a useful starting point for trustees and support them in communicating how they invest to protect and enhance the value of individuals' retirement savings."
Pensions and financial inclusion minister Guy Opperman welcomed the PLSA's guidance. He said: "I encourage pension scheme trustees to follow its framework for holding managers and advisers to account, and for meeting the new requirements on statements of implementation.
"It is essential that schemes not only have a climate change risk policy, but that they are implementing that policy in their day-to-day governance and decision-making. Words must be followed by action."
More on Industry
PTL and Law Debenture report significant growth
PTL and Law Debenture’s pensions business have both reported growth in revenue and new business.
Five stories you may have missed this week
This week’s top stories included an £800m buy-in for the LV= Employee Pension Scheme, while XPS Pensions launched a concierge service for trustees.
Coronavirus Blog: HMRC figures show plunging pension freedom withdrawals; Coronavirus crisis adds urgency to sustainable investing agenda
In this live blog, Professional Pensions brings together all the latest news on the industry's response to the coronavirus pandemic, as well as regulatory and legal updates.
Diversity Project targets investment industry pay gap
The Diversity Project has outlined a new equality target for asset managers with the intention of halving the industry’s gender pay gap by 2030.
Asset managers agree economic recovery is at least two years away
The majority (85%) of asset managers believe economic recovery is at least two years away, according to a poll conducted by XPS Pensions.
