Ignoring climate change risks savers’ retirement, TPR warns

Trustees who fail to consider climate change risk could be exposing themselves to legal challenge. A new legal opinion, the first of its kind in the UK, has been welcomed by environmental lawyers ClientEarth as a key step towards protecting pension savers’ money from climate risk and driving private finance towards low-carbon investment. Climate change carries financial implications for fund performances and thus is the core aspect for all pension savers monies, with a negative fund performance pensioners will begin to lose money over the course of their contributing years.

Climate Change Implications

The Climate risk governance and reporting Act allows the government to make regulations on when and how pension schemes should be required to adopt enhanced governance requirements and report in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Pension scheme trustees will need to put in place effective governance, strategy, risk management and accompanying metrics in relation to climate risks and opportunities. Schemes with assets of at least £5 billion, all authorised master trusts and all authorised collective DC schemes will need to comply from 1 October 2021, when the new regulations are expected to come into force. Other schemes with assets of at least £1bn will need to start complying a year later. The government will consider whether to include smaller schemes in 2023.

As a new and advanced audit firm, we are very modernised and technologically savvy, we perform all our audits electronically and do not hold any paper documents in our Assure UK office. The transferring of information is done online through secure platforms and all testing and data capturing is done online. We have brought climate change on board for the past few years and we ensure we are helping contribute and support our Pension Scheme adopt the climate change attitude. We ensure all of our Pension Schemes have updated their Statement of investment principles which sets out their policies on financially material ESG considerations (including climate change) and as well as including the new Implementation statement within the financial statements.

If you have any questions on climate change, please contact us on info@assureuk.co.uk or call us on 020 7112 8300.

About Assure UK

Assure UK is a leading specialist pensions audit and assurance reports accountancy, supporting a broad range of pension trustees, administrators, and managers across the UK.

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