Select committee: Work and Pensions Committee
Conclusion 13
Fourth Report - Pension stewardship and COP26
Published 30 Sep 2021
Paragraph 48
Addressed to Department for Work and Pensions
Work and Pensions Committee Pension stewardship and COP26 All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
As a large scheme the Local Government Pension Scheme (LGPS) could be well placed to demonstrate and develop best practice in pension scheme governance, including on climate change. The Minister for Pensions and Financial Inclusion told us that, in his view, the Local Government Pension Scheme should be run by the Department for Work and Pensions rather than the Ministry for Housing Communities and Local Government. This is an interesting view. We are not Pension stewardship and COP26 33 convinced that DWP setting pension policy for the whole sector while running one of the largest pension schemes would be straightforward or desirable given the inherent conflicts of interest.
From: Work and Pensions Committee, Fourth Report - Pension stewardship and COP26 (HC 238), paragraph 48, 30 September 2021
Government response
The government responded to the whole report on 17 December 2021 (deadline 30 November 2021).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Government agrees with some recommendations (for example encouraging net zero targets and not incentivising divestment over stewardship) and does not agree with others, including a single lead Minister, a Pensions Regulator working group on net zero targets, and publishing direct investment data.
- On net zero targets, the Government "agrees with the Committee's recommendation" that schemes consider setting them, and says it "will continue to encourage pension schemes to sign up", provided targets do not undermine trustees' existing fiduciary duties.
- It "does not agree" that a single Minister should lead this work, and does not agree that the Pensions Regulator should set up a working group on net zero target guidance, citing industry collaboration and progress already made.
- On mandating that default options align with climate goals, the Government "understands the intention" but is "concerned" that this might force immediate divestment and prevent trustees engaging with companies.
- It expects to consult on UK draft Green Taxonomy criteria "in the first quarter of 2022, ahead of legislating by the end of 2022", and plans to publish a response to the call for evidence "in 2022".