Government considers ethical pensions

The Department for Work and Pensions (DWP) will consult on changes to the regulations that govern how pension trustees consider ESG factors in their investment decisions, as well as pension savers’ ethical concerns.

The consultation will discuss a requirement for pension trustees to state their investment policies on ESG factors and members’ ethics, as well as their approach to stewardship. The action is a response to recommendations made by the Law Commission earlier this year and ShareAction has welcomed the news.

At the same time the Financial Conduct Authority (FCA) is considering the Law Commission’s parallel recommendations concerning contract-based pension schemes. While the DWP is moving forward, the FCA is yet to commit to action in this area.

Catherine Howarth, chief executive of ShareAction, welcomed the news, saying: “The way pension schemes invest, and the policies they adopt, have major impacts on savers’ retirement outcomes but also on the wider world we live in. We urge pension savers in the UK who care about how their money is invested to let the Department for Work and Pensions know they fully support this much needed change in the law.”

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