The Pensions Regulator (TPR) will develop and test a voluntary net zero transition plan template for occupational pension schemes.
It will work with industry stakeholders, advisers and professional bodies to develop this template, which will draw on the work of the UK Transition Plan Taskforce (TPT).
TPR says that developing a transition plan is a proactive step trustees can take to help their schemes manage transition risks, such as investments in fossil fuels or other high-carbon industries losing value or the impact of market volatility. The plans can also help trustees capitalise on the investment opportunities and promote sustainable investment.
TPR said it was launching this initiative as there is not currently a transition plan tailored to tailored to occupational pension schemes. It will set up a transition plan working group to devise an appropriate framework.
TPR’s interim executive director of market oversight and chair of the planned working group, Julian Lyne, says: “Sustainability initiatives should improve investment governance practices and help schemes make good long-term strategic decisions.
“That is why we plan to work with industry in advance of any legislation to make sure we deliver a transition plan template made by industry for industry and that provides high standards of stewardship and helps mitigate financially material systemic risks.”
Although not currently a mandatory requirement, transition plans have the potential to catalyse change and help shape investment decisions in the interests of savers.
Raising trustee awareness of transition plans and their benefits has been an area of ongoing focus for TPR.
Mandating transition plans aligned to the Paris Agreement goal of limiting global temperature rises to 1.5C was included in the Labour Party’s pre-election manifesto.
TPR said the ultimate template will be based on the framework and guidance developed by the TPT and will be presented to the Department for Work and Pensions.
