Members of the UK insurance and pension industry have become signatories of the newly launched Sustainability Principles Charter, which focuses on transparency, reporting and engagement around sustainability in the bulk annuity process.
The insurers that have joined the Charter as founding signatories include Legal and General, PIC, Rothesay Life, Aviva, Standard Life, part of Phoenix Group, and Just Group.
For pension funds, signatories include Cancer Research UK Pension Scheme, Church of England Pensions Board, HSBC Bank (UK) Pension Scheme, Railpen, and Railways Pension Scheme.
Additionally advisers Aon, Cardano, Hymans Robertson, Lane Clark & Peacock (LCP), Mercer, and Redington, have also become signatories.
The Charter was developed by Accounting for Sustainability (A4S), the Church of England Pensions Board and Railpen.
It sets out four guiding principles for the bulk annuity process focusing on transparency, decision making, reporting and engagement, and collaboration.
The Charter was developed after an extensive consultation process with pension funds, insurers, pension advisers and the regulatory community.
It provides guidance around four key principles: transparency, decision making, reporting and engagement, and collaboration.
The majority of occupational defined benefit (DB) pension schemes in the UK, representing about £1.4 trillion in assets under management, are now closed with many maturing on a path which considers transacting with a pension insurer.
Many DB schemes have made sustainability-related commitments to their members, A4S Director of Capital Markets, Kerry King, stated.
He added: “Pension schemes therefore require transparency during the bulk annuity process – before, during and after the point of transaction – on how the insurer considers these commitments and ensures the schemes’ assets will continue being resilient to the growing threats from climate change and other sustainability challenges. In addition, insurers welcome guidance from pension schemes and their advisers as to the information that will be valued as part of the process.”
Senior Manager of Pensions Policy at Railpen, Tim Miller, said the Charter is an excellent demonstration of collaboration between the pensions and insurance industries.
He commented: “In years to come, the pensions industry could see hundreds of billions of pounds of DB assets transfer to the insurance industry through bulk annuity transactions. We believe this Charter will form a critical element in the bulk annuity process, to the ultimate benefit of members.
The Deputy Chief Responsible Investment Officer from the Church of England Pensions Board, Dr Stephen Barrie, highlighted: “By signing the Charter, signatories are recognizing the importance of transparency, embedding sustainability into decision making, ongoing reporting to members and/or trustees, and engagement across the sector as best practice evolves.
“Not only will it be a helpful guiding tool during the bulk annuity process, but it also means that we are all playing an active role in investing in a more sustainable world for members to retire into.”
