Pension Funds: Investments and Tax Relief

Lord Palmer of Childs Hill Excerpts

Thursday 29th June 2023 Lords Chamber

[Viscount Younger of Leckie (Con)]

I do not know about manipulation of pension funds, but I can say that there are strong fiduciary duties on trustees. The noble Lord will know that in the green finance strategy, published in March, the Government committed to engaging with interested stakeholders on how we can continue to clarify fiduciary duty through a series of round tables and a working group of the Financial Markets Law Committee. I think it fair to say that many larger schemes consider climate change risk, which I think is the gist of his question, to be financially material; we have made this clear in guidance.

[Lord Palmer of Childs Hill (LD)]

My Lords, debate on how pension fund assets can be used more productively has focused on defined contribution pensions, rather than traditional defined benefit or final salary-type pensions. Given the large sums currently held in defined benefit pension schemes under a very tight regulatory regime, what plans do the Government have to allow such schemes to invest more productively, as other speakers have said in other contexts, while ensuring members’ benefits continue to be secured?

[Viscount Younger of Leckie (Con)]

The noble Lord makes an important point about defined benefit schemes, which he will know are still maturing, with decreasing numbers of active contributing members and increasing numbers of pensioner members. It is therefore important that their pensions are properly protected and that these schemes are properly funded. The majority of schemes in the DB sector are well run, plan for the future and manage their risks effectively, but the gist of the noble Lord’s question is that there is still more to be done.