Fourth Report - Pension stewardship and COP26
Select Committee
Work and Pensions Committee
HC 238
30 September 2021
Government response
Sixth Special Report - Pension stewardship and COP26: Government Response to the Committee’s Fourth Report of Session 2021–22 · published 17 Dec 2021
Recommendations & Conclusions
6 results
2
Recommendation
Rejected
The Minister for Pensions and Financial Inclusion told us that the Government as a whole...
Recommendation
The Minister for Pensions and Financial Inclusion told us that the Government as a whole is responsible for sharing best practice internationally on investment reporting. We recommend that, in order to increase the prominence and accountability of this important task, …
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Government Response Summary
The government rejects the recommendation for a single Minister to lead this work, stating that global best practice requires co-operation and leadership from a range of stakeholders. It highlights existing multi-departmental efforts, including a high-level Transition Plan Taskforce and the proposed SDR regime.
Department for Work and Pensions
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9
Recommendation
Rejected
Para 42
The idea of “net zero alignment” does not have a single clear definition.
Recommendation
The idea of “net zero alignment” does not have a single clear definition. Without a standardised definition, there is a risk that different pension schemes will interpret “net zero” in different ways. That will make it more difficult for savers …
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Government Response Summary
The government rejects the recommendation for the Pensions Regulator to define a single net zero alignment, citing difficulties, and instead proposes requiring pension schemes to calculate and report one of three flexible portfolio alignment metrics.
Department for Work and Pensions
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11
Recommendation
Rejected
Para 44
While larger schemes are setting net zero targets, it is likely that many smaller schemes...
Recommendation
While larger schemes are setting net zero targets, it is likely that many smaller schemes will not have the resources to do this effectively without support and guidance. Ambiguity about whether net zero targets would put trustees at risk of …
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Government Response Summary
The government rejects the recommendation to establish a working group, stating that significant progress is already being made and that the Pensions Regulator's existing climate change strategy and engagement methods are sufficient for developing and adapting guidance for pension schemes on net zero targets.
Department for Work and Pensions
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12
Recommendation
Rejected
Para 45
Defined contribution schemes used for automatic enrolment are required to have a default option into...
Recommendation
Defined contribution schemes used for automatic enrolment are required to have a default option into which the member is enrolled, unless they specify an alternative. We recommend that the Government consult on the case for mandating that these default options …
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Government Response Summary
The government expresses concern that mandating climate goal alignment might force divestment, hindering stewardship, and therefore rejects the recommendation, instead focusing on consulting on guidance to encourage effective stewardship.
Department for Work and Pensions
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14
Recommendation
Rejected
Para 56
There are a limited number of suitable green assets in which pension schemes can invest.
Recommendation
There are a limited number of suitable green assets in which pension schemes can invest. That means that there is a risk of a “green asset bubble” in the short term, as the market for these products develops. It is …
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Government Response Summary
The government rejects the recommendation, stating it does not agree and that publishing information on direct investments (which was not the core of the recommendation) would not be practically feasible.
Department for Work and Pensions
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17
Recommendation
Rejected
Para 62
Direct investment by pension schemes in green infrastructure and other illiquid assets has the potential...
Recommendation
Direct investment by pension schemes in green infrastructure and other illiquid assets has the potential to benefit savers and the environment. We recommend that the Department for Work and Pensions publishes information about levels of direct investment by pension schemes …
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Government Response Summary
The government rejects the recommendation, stating it is not practically feasible to publish information on direct investments due to the complexity of pension scheme portfolios. It highlights existing regulations to drive assessment and disclosure of climate risk instead.
Department for Work and Pensions
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