Pension Schemes Bill

Lord Hendy Excerpts

Committee stage
Thursday 5th February 2026 Grand Committee

I thank the other noble Lords who have tabled amendments in this group in advance for their contributions, and the Minister for her response. I beg to move.

[Lord Hendy (Lab)]

My Lords, I shall speak to Amendment 218C; I express my gratitude to the noble Baroness, Lady Janke, for supporting it. This amendment would require the Secretary of State to make regulations to ensure that pension schemes invest their funds in a manner that is

“consistent with those provisions of human rights and international law which have been ratified by the UK”.

It would require scheme managers to take appropriate steps to identify, prevent and mitigate the risks that investments may contribute to adverse human rights impacts. These obligations would apply to investments globally.

As the Prime Minister of Canada pointed out in his powerful speech at Davos, it seems

“that the rules-based order is fading, that the strong can do what they can and that the weak must suffer what they must”.

At such a time, we are under an obligation to do whatever we can to uphold the rule of law. The rule of law includes, of course, the duty on nation states to honour and put into effect the obligations that they have explicitly undertaken to observe by ratification of the relevant treaties.

The great jurist Lord Tom Bingham made state compliance with international obligations his eighth principle of the rule of law in his seminal book of the same name. He said:

“The rule of law requires compliance by the state with its obligations in international law as in national law”.


Consistent with that, the current Ministerial Code, binding on British Ministers, requires them as an overarching duty to comply with the law, including international law and treaty obligations laws.

This point was reinforced by my noble and learned friend the Attorney-General in the House when he said of compliance with international law:

“We should all be immensely proud of it, and this Government will seek at every turn to comply with our obligations”.—[Official Report, 26/11/24; col. 680.]


He developed that point in a lecture to the Royal United Services Institute on 29 May 2025, in which he gave this rejection:

“The claim that international law is fine as far as it goes, but can be put aside when conditions change ... The international rules-based order soon breaks down when States claim that they can breach international law because it is in their national interests … The argument … that the United Kingdom can breach its international obligations when it is in the national interest to do so is a radical departure from the UK’s constitutional traditional, which has long been that ministers are under a duty to comply with international law”.


Today, 81 years after the end of the Second World War, in which tens of millions of people gave their lives, the global edifice of international law, erected specifically to prevent the repetition of such horrific events, is in tatters. No matter how justified the perpetrators believe it to be, the fact is that Russia is conducting war on Ukraine; the Israeli state has attacked Gaza and permitted attacks on Palestinians in the West Bank; and the United States has attacked Venezuela and abducted its president, and threatens military and economic attack on Greenland, Iran, Cuba and other states. Iran is waging war on its own people. There are many other conflicts around the world where the United Nations conventions are flouted, humanitarian law is breached and war crimes are committed. As legislators, we have a duty to do what we can to sustain international law and restore its impeccable norms throughout the world.

Amendment 218C is intended to play its part. The pension schemes to which the amendment would apply include the Local Government Pension Scheme, which is one of the largest public sector pension schemes in the UK, with more than 6 million members and managed assets of some £392 billion. It is made up of 86 pension funds, most of which are, as I understand it, administered by elected councillors sitting on a pensions committee. There are other public sector pension schemes, too—they are, like the LGPS, equally emanations of the state—but the amendment would also apply to private sector schemes. It is the UK’s duty to ensure that the entities it regulates and over which it has power do not place it in a situation in which it is non-compliant with its international obligations—in other words, obligations that it has voluntarily ratified and by which it continues to be bound.

The provisions of this Bill evidence the regulatory power that the UK state exercises, and can exercise, over pension schemes within its jurisdiction. The Government have the power to ensure that the pension schemes regulated by the Bill do not put the United Kingdom in breach of its international obligations. The UK must adhere to its fundamental international law obligations in all circumstances—obligations such as the prohibition of genocide, the prohibition of war crimes, the upholding of the Geneva conventions, the elimination of racial discrimination and apartheid, and respect for the right to self-determination. That goes without saying. However, the UK must also refrain from rendering aid or assistance to another state’s serious breaches of these peremptory norms. It must co-operate with other states to take all reasonably available measures to bring to an end any such violations of those peremptory norms.

The amendment would require the Secretary of State to produce guidance to administering authorities to give effect to the duties, by requiring an end to investments in companies that aid or assist in the commission of grave violations of international law. It would also issue directions to administering authorities in the event of non-compliance. Local administering authorities must ensure that their investment strategies give effect to the prevention and non-assistance duties. They must refrain from making new investments in companies involved in serious breaches of international law and take reasonable steps towards divesting from such companies.

--- Later in debate ---

I echo the wise words of the noble Lord, Lord Pitt-Watson—it is a pleasure to hear him participating for the first time in the Committee, and I am sure we look forward to many more constructive contributions from him—about the issues relating to Amendment 218C and the realities of pension fund investing, where the vast majority is in passive investments. I also caution about the uncertainties involved in making judgments about what international law does and does not say, and about temporary or more serious findings. There is often an indicative finding, which is undone later. It seems to me that expecting the Government or trustees to be able to assess what international law says when there is so much uncertainty could be the thin end of the wedge in terms of putting extra duties on trustees—they already have so many—and may cause significant difficulties or extra costs. That is not to say that I disrespect or have concerns about responsible investing per se. I think there is a role, and it will be up to trustees to make their own decisions in this arena, rather than for those to be mandated. I look forward to hearing other noble Lords speaking and to the response from the Minister.

[Lord Hendy (Lab)]

I am sorry to interrupt the noble Baroness, but I emphasise that this amendment is to propose regulations that will be drafted by the Secretary of State. One would expect the Secretary of State to determine whatever issues there are about international law. By the way, international law itself is quite clear. It is about whether the factual situation on the ground meets the particular requirements of international law, but I think that could all be dealt with in regulation.

[Baroness Altmann (Non-Afl)]

I understand the point that the noble Lord is making. I am just not convinced that one would want to put this type of responsibility on the Government. Of course, judgments in international law change from time to time, and trustees are investing for the very long term. I recall the example of Myanmar given by the noble Lord, Lord Pitt-Watson. There are difficult issues that I understand the Government might regulate for. How pension trustees then build that into their asset allocation is another layer of complexity that I have concerns about, but I certainly have every sympathy with the intentions of the noble Lord, Lord Hendy, and the noble Baroness, Lady Janke. It is a difficult one. I just caution that getting to that level of prescription could be the thin end of the wedge for pension trustees, who already have so many responsibilities upon their shoulders.

Pension Schemes Bill

Lord Hendy Excerpts

Report stage
Monday 23rd March 2026 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I shall make a few brief remarks in support of the Government. I declare an interest as chairman of the Financial Markets Law Committee, which issued a paper about two years ago now to try to explain the very complicated problems. This would be an easy matter to solve if lawyers were not paid at the extortionate rates at which they are paid, because each bunch of trustees could take their own legal advice, but unfortunately we live in a world where lawyers are grossly over-remunerated, and it is not practicable for trustees of pension schemes to take legal advice. It is therefore necessary to provide some guidance in relation to fiduciary duties.

These are complicated, partly because they have a very ancient history, albeit one that has worked well, and partly because the Law Commission issued a paper some years ago which was not entirely clear. The paper that the Financial Markets Law Committee issued, although it was agreed unanimously by the committee, is not entirely easy to follow. Therefore, what was needed was something that ordinary trustees could look at and be guided by in the exercise of their fiduciary duties. As the Minister has explained, and as my understanding is, the guidance is going to be prepared by an independent group. Having had to see some of those who have been involved, “independent” is a correct description of them. Pension lawyers are tough people and I have no doubt whatever that they will produce independent advice and will not be cowed by any Minister into providing something that does not accord with the law—what they will be doing is giving guidance on the law.

There is one point upon which I disagree with the Minister. She says that the guidance will be authoritative. Yes, in one sense, but not authoritative in the sense in which it is popularly understood. They cannot give advice that changes the law in any way whatever, because that would be ultra vires what they are intending to do, and if they did, one could go to the court and say, “The Secretary of State’s guidance does not represent the law”. Therefore, the argument that this is in some sense changing the law is totally misconceived, maybe because some have not read the amendment very closely. This is simply guidance.

When we look at fiduciary duties and at the 2005 pension regulations, as amended in 2018, there are phrases that are not easy to understand. Therefore, what the Secretary of State is going to do seems to me entirely sensible. She is going to get a group of independent people—and jolly independent they are too—presided over by Sir Robin Knowles, who is fiercely independent, and all they will be doing is trying to explain the law to people, without the people concerned having to pay the fees of lawyers.

I cannot understand how anyone could possibly oppose this. If there is something in the wording that is not quite right, it would be wonderful if someone could say what it is; no doubt it could be corrected in time for Third Reading. To deprive pension trustees of advice and force them into the hands of lawyers is quite wrong. Who pays the fees of the lawyers? The pension funds. This is a good piece of legislation, and we ought to support His Majesty’s Government.

[Lord Hendy (Lab)]

My Lords, what a pleasure it is to follow the noble and learned Lord, Lord Thomas of Cwmgiedd, in supporting the Government’s amendments and Amendment 167 in the name of the noble Baroness, Lady Hayman, and others, which all propose that the Secretary of State should publish statutory guidance for trustees in investing their funds. In Committee, the noble Baroness, Lady Janke, and I proposed an amendment to require regulations to guide trustees’ investment; in particular, so that trustees should avoid incompatibility with international law. My noble friend the Minister was against regulating in a way which would constrain the autonomy of trustees, and we have not pursued that amendment on Report.

The proposal for guidance rather than regulations is an attractive one. My request today is that the factors to which the guidance should have regard should include not just pension law but the international legal obligations of the UK, to ensure that pension scheme investments do not, directly or indirectly, cause or contribute to activities which are inconsistent with the provisions of human rights and international law; otherwise, UK pension schemes, particularly those which are an arm of the UK state, such as the Local Government Pension Scheme, risk involving the UK in breaches of its international obligations.

The UK is obliged not to authorise, explicitly or implicitly, serious breaches of peremptory international norms by other states; nor must it render aid or assistance to any entity involved in serious breaches of such norms by another state. The UK must co-operate with other states and take all reasonably available measures to bring an end to any violations of such norms by another state. This self-evidently applies to the entities involved in the activities of the Israeli Government in Gaza and the West Bank, but, sadly, it applies to many other states too. It also applies to entities in supply chains which involve the UK and other states breaching the minimum labour standards of the International Labour Organization and the Council of Europe through its European Social Charter.

I ask my noble friend the Minister: will she ensure that the guidance proposed encourages pension fund trustees to take into account, among other things, the obligations of international law in making their investment decisions? Pending that guidance, an expression of encouragement from her would be much appreciated.

[Lord Thomas of Cwmgiedd (CB)]

Before the noble Lord sits down, can I ask him a question? The instrument says, “on the law”. We know that English law operates so that there are some obligations that are performable only by His Majesty’s Government, and other obligations that are accorded only into domestic law. He surely is not suggesting that obligations that go beyond domestic law are somehow to be brought within the guidance. If so, that would be a massive change in the law and well beyond anything that this group of people or the Secretary of State were permitted to do.

[Lord Hendy (Lab)]

The answer to that question is complex, but there is one proposition that is not: institutions that constitute an arm of the state are bound by international law. That will apply to the Local Government Pension Scheme and, as I understand it, to other pension schemes.