The Government will look to introduce new legalisation, to put a wider definition of trustees’ fiduciary duty onto a statutory footing.
This announcement was made by the pensions minister Torsten Bell in the debate on the Pension Schemes Bill yesterday.
It came in response to an amendment tabled by the Labour MP Liam Byrne, a former chief secretary to the Treasury and who currently chairs the House of Commons Business and Trade Committee.
Byrne’s amendment would allow trustees to include a range of factors when making investment decisions. This could include looking at ‘system risks’, such as climate change, members views and how any investment decision might impact members’ future standard of living.
Bell said that rather than include this within the Bill, the Government will bring forward separate legislation so that statutory guidance can be issued on trustees’ fiduciary duty when making investment decisions. This should provide further consultation and clarification on this amendment. Byrne proposals had cross-party support from 30 MPs.
Widening the definition of fiduciary duty is likely to support the Government growth agenda, and support investments into UK productive assets and sustainable finance opportunities.
Richard Evans, knowledge counsel at Herbert Smith Freeholds Kramer said: “Whether guidance will in itself move the dial remains to be seen. Trustees may wish to have more – for example, a safe harbour provision as regards decisions made on the basis of the guidance.”
He added that all proposed opposition amendments were either not called or defeated, with the Bill completing for the time being, its passage through the House of Commons.
All Government amendments to the Bill were approved. These included tweaks to the rules about the aggregation of DC schemes for the purpose of the £25bn minimum size requirement and the abolition of the PPF administration levy.
