Source · Select Committees · Work and Pensions Committee
Recommendation 13
13
Deferred
Paragraph: 127
Consult on introducing LDI disclosure requirements for pension schemes to improve governance.
Recommendation
In addition to putting in place mechanisms to provide real-time warning of reductions in LDI resilience, the Department for Work and Pensions and The Pensions Regulator should consult on whether introducing disclosure requirements on pension schemes relating the use of LDI through the annual report or investment statement, would help improve standards of governance. They should consult with stakeholders on the data it is appropriate to collect. We suggest that consideration is given to: the maximum leverage allowed in the LDI funds in which the scheme is invested; the type of LDI they invest in; compliance with minimum resilience levels; and data on the pension schemes’ asset allocations, by growth and matching assets. If they conclude that requiring pensions schemes to report regularly on their use of LDI would place an undue burden on some schemes, TPR and DWP should explain the basis for allowing such schemes to continue to use leveraged LDI.
Government Response Summary
The government states existing law requires statements of investment principles and TPR is already collecting data; DWP will consider whether changes to disclosure requirements are appropriate in light of TPR’s findings, deferring a direct commitment to consult on new requirements.
Paragraph Reference:
127
Government Response
Deferred
HM Government
Deferred
The law (section 35 of the Pensions Act 1995 and the Occupational Pension Schemes (Investment) Regulations 2005) requires trustees of a scheme with more than 100 members to prepare a statement of investment principles setting out their investment strategy, including the investment objectives and policies trustees adopt. This statement is reviewed at least every 3 years and after any significant change in investment policy. As set out in the response to recommendations 2 and 5 TPR has a programme of work in place to collect data and monitor compliance with resilience standards. DWP will consider, in light of TPR’s findings, whether changes to disclosure requirements are appropriate.