Labour pushes climate change, superfunds, dashboard amendments

Shadow chancellor Anneliese Dodds, Ed Miliband, the shadow secretary of state for energy and climate change, and shadow pensions minister Jack Dromey are also named as spponsors.

The amendments, filed late in the day, are to be debated in parliament on Monday, though LCP partner Steve Webb voiced his concerns on Twitter that the packed schedule may not leave sufficient time “to do justice to these important issues".

Extending the climate change provisions in this way needs further thought

Francois Barker, Eversheds Sutherland

The superfunds amendment, sponsored by Sir Keir and Mr Dromey, along with fellow Labour MPs Jonathan Reynolds and Nicholas Brown — the party’s chief whip — would compel secretary of state for work and pensions Thérèse Coffey to “publish a statement on proposals for primary legislation in relation to a duty on the Pensions Regulator to regulate pension superfunds”.

The move, first mooted by Labour and Scottish National party MPs in the committee stage debate last week, was welcomed by some industry players as indicative of the recognition of the positive role superfunds could play.

While they would not be drawn on the specific amendment proposed by Labour, a spokesperson for The Pension SuperFund told Pensions Expert: “We agree with the pensions minister Guy Opperman when he said, ‘well-run superfunds have the potential to deliver more secure retirement incomes for workers, while allowing employers to concentrate on what they do best — running their businesses’.

“The Pension SuperFund is ready to operate within existing guidance from TPR or under primary legislation if and when that comes forward from parliament. Having well-run and well-regulated pension superfunds is in all of our interests, particularly members.”

Pressure builds for climate action

The sponsors of the superfunds amendment were joined by Ms Dodds in sponsoring a second amendment that would require certain pension schemes to align their investment strategies and portfolios with Paris climate agreement targets.

Per the members’ explanatory statement, the amendment “would mandate occupational pension schemes to develop a strategy for ensuring that their investments and stewardship activities are aligning with the Paris agreement goals, and include an objective of achieving net-zero greenhouse gas emissions by 2050 or sooner”.

The amendment coincides with the call made today by leading charities and finance companies, and spearheaded by Richard Curtis’s Make My Money Matter campaign, for pensions to be put “on track to net-zero”.

In a letter to Prime Minister Boris Johnson, stakeholders including Mr Curtis’s campaign, Aviva, ShareAction, Oxfam, the West Yorkshire Pension Fund and Greenpeace requested that the government agrees to “the pension power amendment” tabled by the Labour MPs.

Though the group welcomed chancellor Rishi Sunak’s introduction of mandatory reporting by big companies and financial institutions on the risk of climate change, they called on the government to go further by tying pension schemes in law to the Paris targets.

Mr Curtis said: “Our pensions are powerful, and the government has a once-in-a-generation shot at giving us all pensions to be proud of. We know that UK savers want their money to matter, and this amendment offers the perfect opportunity to ensure our savings help to build a world in which we actually want to retire.”

However, Francois Barker, partner and head of pensions at law firm Eversheds Sutherland, told Pensions Expert that further thought is required if the amendment is to be practicable.

“The idea of requiring scheme trustees to develop a ‘Paris-alignment strategy’ would be a further strengthening of the climate change provisions already in the bill,” he said.

He added that, while the bill’s current provisions already allow for regulations requiring trustees to achieve the goals of the Paris agreement, the amendment goes further in two ways. 

First, it mandates the requirement in primary legislation, “making it much harder to change or weaken in the future”. Second, it specifies that the aim of a “Paris-alignment strategy” is to achieve net-zero greenhouse gas emissions by 2050, a requirement Mr Barker said “is much more directional than the other climate change provisions in the bill”.

“Extending the climate change provisions in this way needs further thought,” he argued.

“The drafting of the amendment is quite loose — the net-zero requirement presumably relates to the scheme’s investment portfolio, but this isn’t clear. And there is already a danger that the existing provisions in the bill over-emphasise the E, to the detriment of the S and G, in ESG. These new provisions would increase that risk further.”

DWP cagey in response

Further amendments to the bill introduced on Thursday would impact the delivery of the pensions dashboards, with various goals. 

As noted by Financial Times pensions correspondent Josephine Cumbo, these include presenting costs on the dashboards, limiting the involvement of commercial providers in digital dashboards being developed for the UK market, and preventing for-profit providers launching their own dashboards alongside that of the UK government.

In response to all of the above, a DWP spokesperson told Pensions Expert: “We are carefully considering all amendments to the pension schemes bill and the government will detail its response in parliament.”