Pension funds face working in new climate

New legislation means you could be caught out - but Reeves Independent can help

Reeves can help with new pension rules

New rules introduced this month require trustees to consider climate change and other environmental & social factors when making investment decisions.

Sir Steve Webb, the former pensions minister, said that trustees ultimately could be opening themselves up to the risk of being fined or banned for non-compliance. They may also face legal challenges from pension fund members.

New rules from the Department for Work and Pensions came into force on October 1st for all defined-contribution schemes with more than 100 members. The regime will be extended to traditional defined-benefit schemes next year.

Trustees will have to set out in writing how they are taking environmental, social and governance – ESG - factors seriously when they invest members’ money.  In addition, they will have to explain whether they consider other non-financial factors, such as their members’ ethical and moral views.

Trustees who don’t take the new regulations seriously could come under the scrutiny of The Pensions Regulator, according to a joint report from Sir Steve’s employer, Royal London, and Herbert Smith Freehills, the legal firm.

“The big schemes with professional advisers will be all over this,” Sir Steve said, “but I think it is very likely that some smaller schemes won’t have even started to think about it.”

''Reeves Independent can help you with any changes to help you avoid any potential pitfalls.''

Reeves Independent are very aware of the new regulations and are already working to notify clients. Whilst it may not seem the biggest of news, it’s very important that we communicate this with our clients so that they are aware and can avoid any potential banana skins.  

Samantha Brown, head of pensions at Herbert Smith, said: “ESG is no longer an optional extra for trustees, pension providers and asset managers. It’s essential that they are able to demonstrate that they are taking it seriously and that they don’t just treat this as a tick box exercise.”

At Reeves Independent we leave absolutely nothing to chance. That means making sure we keep tracking the markets, capitalising on movements and avoiding any potential dangers. It also means making sure that we follow trends, news and the latest regulations to ensure our clients are kept in the loop and their investments & pensions are performing strongly. 

Royal London said that, on balance, the academic evidence suggested that companies with strong ESG performances generated higher investment returns with less volatility.

ESG investing has changed from a generation ago when, polluters and those who showed little care for the environment, were screened out of investment portfolios. Nowadays, fund managers are more likely to engage with managements in an attempt to pressure them into polluting less. Such investing has been criticised by some sceptics as ‘greenwashing’ — giving the impression of changing behaviour while investing in the same way as before.

Whilst this may be the case, Reeves Independent are committed to honesty, fairness and helping the community & environment. We will try to instil our methods into all our dealings. With this in mind, you will receive a service from honourable pension specialists. We can help you navigate any tricky situations that may arise for a smooth, bright and sustainable future.

Sources: information is obtained from a range of sources including seminars, webinars, industry publications and general media comments.

Disclaimer:  This document is not intended as advice and no investment decisions should be made solely on the back of this email.  Past performance is no guide to the future.  All investments carry the risk that you will not get back what you have put in.

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