On the go: The Pensions Regulator has published an illustrative example to help trustees and advisers comply with their environmental, social and governance duties, as it revealed it will start contacting schemes that are now in the scope of the new regulations.
The example shows how the trustees of the fictitious XYZ pension scheme might approach meeting the requirements of the new climate-related regulations, which are covered in TPR’s guidance for trustees on meeting tougher climate change governance and reporting standards, published in December.
The new rules on Task Force on Climate-related Financial Disclosures initially apply to authorised schemes and those with relevant assets of £5bn or more.
However, it will also apply to schemes with relevant assets of £1bn or more from October 1 2022, and the Department for Work and Pensions has said it will consider rolling the rules out to smaller schemes in 2023, the regulator stated.
TPR also revealed that it plans “to contact trustees of schemes that may have moved into scope of the rules since their last valuation to ensure they are aware of their duties”.
The example, which includes a scheme with three separate sections — a very mature defined benefit section, closed to accrual; an immature DB section, open to accrual but closed to new entrants; and an open defined contribution section, growing rapidly — is intended to help trustees and advisers on how they “might approach implementing the requirements of the new regulations at a practical level”, TPR stated.
However, the regulator warned that it is not intended to be used as a checklist. “The governance structures of schemes, the skill sets of their trustees, and their investment implementation arrangements vary significantly,” it noted.
David Fairs, TPR’s executive director of regulatory policy, analysis and advice, said: “We expect this example will prove helpful to trustees and other industry stakeholders as they get to grips with the new climate-related regulations.
“From October, more schemes are set to come into the scope of these rules, so I also urge trustees and advisers of those schemes to make sure they are familiar with the relevant guidance in this area.
“Those running schemes out of scope of the rules, but who want to do more to manage climate-related risks and opportunities, may also find both our new example and final guidance helpful.”
