7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days

• TPR reports on ESG compliance
• TPO publishes corporate plan for 2024-25
• ABI comments on progress towards “Mansion House compact” ambitions
• Consumer duty comes into force for closed products and services

TPR reports on ESG compliance

On 30 July 2024, TPR published its findings from a review of trustees’ compliance with ESG duties, including climate reporting obligations, SIPs and implementation statements. While the review found that most trustees meet their ESG duties, TPR commented that “many achieve only minimum compliance”, for example failing to “demonstrate ownership” of ESG policies and key activities.

TPR suggests that trustees should consider:

• whether consolidating their scheme could benefit members, where trustees believe they lack the expertise or scheme governance scale to manage financially material ESG risks effectively, and
• being early voluntary adopters of other ESG related reporting such as nature, biodiversity and social factors, as ESG disclosure reporting requirements “are likely to continue to expand”.

TPR would also like to see “more evidence of trustee oversight” in relation to delegations to investment managers.

TPO publishes corporate plan for 2024-25

On 31 July 2024, TPO published its latest corporate plan, outlining key priorities and areas of work for the coming year.

A key focus is addressing customer waiting times and the build-up of a large historical caseload, as an increase in demand has “outstripped” capacity. Priorities for the year include reducing the number of complaints TPO handles, by:

• providing clearer information and signposting to reduce invalid applications
• working with the broader pensions sector to improve complaint handling
• engaging with stakeholders earlier on issues that might result in a significant volume of complaints and optimising “lead cases” where possible, and
• working with the DWP to inform developments to pensions legislation.

ABI comments on progress towards “Mansion House compact” ambitions

In a progress update published on 30 July 2024, the ABI has commented that signatories to the Mansion House compact are making “significant strides”. With the ambition of allocating at least 5% of DC default funds to unlisted equities by 2030, the Compact is a voluntary industry-led initiative to secure better financial outcomes for DC savers.

Signatories to the Compact currently hold the equivalent of 0.36% of the total value of their DC default funds in unlisted equity assets, and firms report taking key “enabling steps” towards progress on the initiative. Despite barriers to private market investment reducing in recent years, many remain, including a focus on fees versus value and managing liquidity.

Consumer duty comes into force for closed products and services

On 31 July 2024, the FCA’s consumer duty came into force for closed products and services, ie where the contract was entered into before 31 July 2023, and the product or service has not been marketed or distributed to customers on or after that date.

The duty has applied to new products and services and existing products and services open to sale or renewal since 31 July 2023, and aims to set higher and clearer standards of consumer protection. Although not directly relevant to trustees of occupational pension schemes, it may impact the way FCA-regulated services, such as investment advice, are provided to the scheme. Trustees may wish to liaise with their providers to understand any ongoing impact for them.