The Pension Schemes Bill 2025 is currently undergoing reform, but a significant gap has been identified concerning climate change, which poses the primary threat to secure retirements. UK pension schemes collectively hold £88 billion in fossil fuel companies, creating substantial financial risks for future retirees through “stranded assets” and exacerbating climate breakdown.
A coalition of civil society groups and trade unions, including the Finance Innovation Lab, is proposing an amendment to address this. The amendment calls for pension funds to divest from thermal coal abroad and to establish a process for reviewing broader fossil fuel divestment over time.
This proposed change aims to protect savers’ financial security, bolster UK economic stability, and align pension investments with national climate objectives, thereby establishing the UK as a leader in sustainable finance.
