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Pensions Bill

There are six amendments in my name on the Marshalled List today. The reason for them is that I was contacted by an organisation called Fair Pensions, with which I have worked in the past. It campaigns for responsible investment, and aims to persuade UK pension funds to adopt effective and responsible investment policies. Fair Pensions, which has briefed me for today’s debate, believes that these amendments would improve the Bill and ensure that the Personal Accounts Delivery Authority abided by best practice on shareholder activism and so promoted acceptable standards of corporate social responsibility on the part of investee companies. Such best practice would have significant benefits for companies, in that it would provide investments against medium-term and long-term risks associated with environmental, social and governance issues. The amendments would also ensure that the interests of members—the beneficiaries—of the personal accounts scheme would be formally represented within the delivery authority. Shareholder activism to promote corporate social responsibility does not dictate investment strategy; rather, it requires fund managers to develop a toolkit for identifying, assessing and acting upon issues that may adversely affect returns. It also encourages fund managers to recognise that they are investing pensions and pensions-related assets, and therefore need to analyse medium-term and long-term trends as well as short-term ones. Fund managers who have adopted responsible investment practices have worked to future-proof the profits of their investee companies. One example is the Carbon Disclosure Project, of which the Universities Superannuation Scheme pension fund, which I understand is the second largest occupational pension scheme in the UK, is a founding member. The project now has 72 per cent of the 500 largest publicly owned companies reporting on carbon emissions. If the delivery authority does not include members with responsibility to represent the interests of the intended beneficiaries of personal accounts, beneficiaries may not be confident that the authority will take their best interests into account. For example, if a committee consists primarily of individuals with finance backgrounds, it could be thought to lack the willingness and ability to evolve in a constantly changing legal and regulatory environment. If the delivery authority does not include members able to represent the interests of beneficiaries, it could consist entirely of persons with finance backgrounds who would oversee other persons with finance backgrounds with no window to the outside world and no communication with those whom personal accounts are designed to benefit. The rationale for Amendments Nos. 85A and 104A is that stating that at least one-third of the members of the committee are to be representatives of scheme members brings this scheme into line with the situation that applies in occupational pension schemes, where at least one-third of trustees must be member-nominated. While at this stage it is not possible for such persons to be members of the scheme, because it is not yet operational, it is still desirable for their interests to be strongly represented, as is the case for occupational pension scheme members. Under these circumstances, I hope that the Minister will look at these amendments favourably.