Pension schemes need to realign their focus onto long-term and responsible investment, according to the UK Sustainable Investment and Finance Association (UKSIF).
Its calls come after the publication of the work and pensions committee’s latest report, Improving governance and best practice in workplace pensions. The report says a single regulator would be more effective in overseeing workplace pension schemes than the three currently in place.
As it stands, the Pensions Regulator and two financial services bodies – the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) – govern UK pensions. The FCA and the PRA were formed earlier this month alongside the Financial Policy Committee (FCP) after the dissolution of the Financial Services Authority.
The committee says regulatory “gaps” will appear under the current structure.
UKSIF – which gave evidence to the committee – said that while it was “pleased” to hear the committee’s recommendations for a more joined-up approach to pension regulation, the report failed to address sustainable investment.
“We would have liked to see a clear recognition of the need for long-term responsible investment and asset ownership to ensure good member outcomes”, said head of government relations Caroline Escott.
“The Kay review and the UK Stewardship Code are recent high profile initiatives that highlight the importance of responsible investment and ownership.
“It is disappointing that the committee’s report makes no reference to them despite the importance of protecting the value of pension fund assets both to achieve good member outcomes and to maintain society’s trust in pension funds.”
UKSIF recently unveiled Simon Howard, former senior executive at Liverpool Victoria, Friends Provident and 3i Asset Management, as its new chief executive. He will replace Penny Shepherd at the beginning of May.