Pension trustees need longer to adapt investment plans for ESG

The Institute and Faculty of Actuaries (IFoA) is calling on the government to provide a realistic timetable for pension trustees to show they are recognising the financial impact of environmental, social and governance (ESG) considerations. The IFoA supports the Department of Work and Pensions (DWP) ‘Consultation on clarifying and strengthening trustees’ investment duties’. However, the current impact assessment underestimates the time needed to respond.

Jules Constantinou, IFoA President, said:

“It is appropriate that pension trustees are being called upon to show they are recognising the financial impact of ESG factors. However, for change to be effective, they need clear guidance and reasonable timeframes. This is a complex marketplace and funds vary in size so there is no one-size-fits-all solution for trustees to provide policy statements. We want to see a phased approach to allow the market to explore different options.

“DWP’s explicit mention of climate change as a consideration for trustees is a big step forward. Many of those joining the workforce and being automatically enrolled into a pension will be saving for decades. Their investment managers should be considering not just short term financial returns but the impact of their investments on the environment in years to come. This is a crucial part of delivering intergenerational fairness and an area where we believe there is a need for greater consumer awareness and more action by industry.”

The IFoA is working hard to support members in understanding how ESG factors are relevant to their work. Our Risk Alert has raised awareness around the financial risks posed by climate change. We have also published guides to help pensions actuaries consider how to incorporate ESG factors into their work.

~ENDS~

Contact:
Sonia Sequeira, Media Relations Manager
Tel: 07525 592 198
Email: sonia.sequeira@actuaries.org.uk
Notes to Editor

1. Institute and Faculty of Actuarie submission to the Department of Work and Pensions Consultation on clarifying and strengthening trustees’ investment duties’.
    
2. Institute and Faculty of Actuaries Risk Alert to members on Climate-Related Risk.
    
3. The Relevance of Resource and Environment Issues to Pension Actuaries, Institute and Faculty of Actuaries.

About the Institute and Faculty of Actuaries

The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body.

Research undertaken by the IFoA is not commercial.  As a learned society, research helps us to fulfil our royal charter requirements to further actuarial science and serve the public interest. 

Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.

Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.

Members are governed by the Institute and Faculty of Actuaries. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of actuaries in society.

The IFoA is available to provide independent expert comment to the media on a range of actuarial- related issues, including enterprise risk management, finance and investment, general insurance, health and care, life assurance, mortality, and pensions.