At the start of this month, on July 7th, Parliament debated the Pension Schemes Bill for the first time. An array of MPs called for greater ambition from the bill – which is the first legislative step of the government’s landmark pension reforms – to ensure that the pensions system works for the future prosperity of all.
The new bill promises to deliver substantial changes to how the UK’s multitrillion-pound pension industry invests our collective retirement savings and supports national growth. However, it does not tackle the biggest threat to our security and prosperity in retirement: the impacts of climate change and nature destruction. We were grateful to a number of MPs for pointing out this failing.
For example, Lib Dem spokesperson for pensions, Steve Darling, called for the bill to be strengthened to ensure that our pensions are driving positive environmental outcomes.
His colleague, Manuela Perteghalla, went further: “It is worrying that we do not see an explicit commitment in the Bill to support the divestment of pension funds from planet-wrecking industries. For example, local authorities invest about £10 billion in direct or indirect fossil fuel industries through their local government pension scheme funds.”
Neil Duncan-Jordan also highlighted the extent of investment in fossil fuels and deforestation by pension funds, and called for legislative action to phase out the funding of such destructive assets. These contributions built on a question Labour’s Anna Gelderd posed to the pensions minister Torsten Bell a couple of weeks earlier, when she expressed concern about the financial risk these kinds of investments pose for her constituents’ long-term savings.
Jayne Kirkham MP’s contribution to the debate drew on her experience participating in the governance of pension schemes. She called for the government to make sure that the creation of ‘megafunds’, as proposed by the bill, does not stop pioneering pension schemes from pursuing responsible investment strategies and climate targets.
The lack of any link between the bill and the UK’s green economy ambitions is particularly surprising, given that the government has described net zero as the “economic opportunity of the century”. Conservative MP Simon Hoare took this up with minister Ed Miliband, who responded positively, in the State of Climate and Nature debate a week after the second reading of the bill.
Labour’s Debbie Abrahams, chair of the Work and Pensions committee, shared evidence the Finance Innovation Lab provided her ahead of the bill’s introduction to parliament. As well as emphasising the opportunity for reforms to unlock pension capital to invest in the green transition, she shone a light on the extreme level of inequality in the pensions system.
Shadow minister Mark Garnier expressed concern that the current pensions system does not guarantee people a secure, decent retirement, and he criticised the bill for not addressing this.
There’s no doubt that the work of the Better Pensions coalition, coordinated by the Lab, influenced this cross-party pressure to better align the new bill with economic and environmental justice. Read our joint MP briefing and get in touch if you’d like to find out more.
The government has a once-in-a-generation opportunity to fix the UK’s broken pensions system. Call on it to act now by signing the petition (hosted by 350.org and Just Money Movement) or writing to your MP via UK Divest’s tool, and add your voice to growing calls for a fairer, greener future.