PLSA launches guidance for investment disclosure

The new investment disclosure requirements come into effect from October

The Pensions and Lifetime Savings Association (PLSA) has published guidance to help pension trustees navigate upcoming investment and responsible investment disclosure requirements.

The guidance will support both defined benefit (DB) and defined contribution (DC) trustees in meeting new requirements to disclose their investment and responsible investment activities over the past year in an ‘implementation statement’.

The new requirements, which come into effect from October, will see trustees disclose how, and to what extent, their investment action over the course of the previous year follows the investment intent, as outlined in the scheme’s Statement of Investment Principles (SIP).

However, the requirements differ slightly for trustees of hybrid and DB-only schemes, as hybrid DC schemes are required to disclose against all parts of their SIP, whilst DB schemes are required only to disclose on their voting and engagement behaviour.

The PLSA guidance offers practical support for trustees to ensure “meaningful and relevant disclosures” and builds upon the association's previous guide on environmental, social and governance (ESG) and stewardship.

The guide outlines what the legislation requires, the specific considerations around voting behaviours disclosures, and ‘top tips’ for investment and responsible investment communications.

It also sets out a mix of general principles and more detailed considerations for trustees to use when producing statements.

The guidance was produced by the PLSA’s Voting and Implementation Statement Working Group, as well as a Stakeholder Group, which is made up of government, regulatory and industry representatives.

PLSA senior policy lead for investment and stewardship, Caroline Escott, commented: The implementation statements are a very new discipline for trustees, and will require them to carefully consider which investment decisions and activities have or will have the greatest impact on their investment objectives.

She said, we believe that well-crafted, relevant and interesting disclosures will add real value to beneficiaries in understanding their scheme’s investment approach, including their approach to ESG and stewardship issues.

With policymakers and the public increasingly interested in how schemes invest, we hope that our guidance will provide a useful starting point for trustees and support them in communicating how they invest to protect and enhance the value of individuals’ retirement savings, Escott said.

Commenting on the launch of the PLSA's guidance, Pensions Minister Guy Opperman, said: I welcome the guidance launched today by the PLSA. I encourage pension scheme trustees to follow its framework for holding managers and advisers to account, and for meeting the new requirements on statements of implementation.

He said, it is essential that schemes not only have a climate change risk policy, but that they are implementing that policy in their day-to-day governance and decision-making. Words must be followed by action.