A busy 2020 is predicted for the pensions industry

17 Jan 2020

Pension experts have forecast a hectic 2020 for the industry, with the expected Pensions Schemes Bill and increased calls for responsible investment top of the list of activity.

Although Brexit negotiations could delay the bill, collective defined contribution (DC) scheme legislation, increased powers for The Pensions Regulator (TPR) and the introduction of the pensions dashboard are likely to feature in the coming year when the bill is introduced.

Climate-friendly investment strategy regulation is reportedly likely to increase, with pension schemes’ best practice expected to face further scrutiny.

This year is set to be a turning point for pension schemes getting to grips with environmental, social and governance (ESG) issues, with climate change being a hot topic.

Regulators will continue to demand action with trustees being required to make additional disclosures on their planning and management of material ESG risk factors within their Statements of Investment Principles by 1 October 2020. 

It’s expected that there will be a revision and tightening-up of best practice regarding pension funds embedding climate action into investment strategies.

It’s not enough to simply create frameworks such as sustainable development goals, pension funds will have to look at them from an investment point of view to map their portfolios and align themselves without impacting the expected risk adjusted returns.

There are three changes that are confirmed for 2020 – the state pension age will rise to 66, the state pension will increase by 3.9 per cent to £175 a week and the lifetime allowance will increase to £1.073m, in line with the consumer price index.

Several other regulatory reviews look set to improve outcomes for pension savers, with regulators pressing for schemes to consolidate, leading to better governance and economies of scale.