This week, the Society of Pension Professionals (SPP) held an event to explore the evolving role of sustainability in pension buy-outs and what it means for advisors and trustees.
The Charter
Last year, Accounting for Sustainability (A4S), The Church of England Pensions Board and Railpen brought together pension schemes, insurers, pension advisers and the regulatory community to produce a Sustainability Principles Charter for the bulk annuity process.
The Charter seeks to align expectations around sustainability within the bulk annuity process. It sets out clear principles to drive greater transparency, reporting and engagement before, during and after a buy-out or buy-in transaction between pension schemes and insurers.
There are currently 35 signatories to the Charter, including 9 Bulk Purchase Annuity (BPA) providers (representing 97% of the UK BPA market), pension and investment advisers with over £3.1 trillion UK-based AUA, and pension schemes representing over £100 billion in Assets Under Management.
Charter awareness
The hundred or so pension professionals who attended the SPP event this week, were initially asked if they were aware of the Sustainability Principles Charter. The majority of respondents, 55% said that they were, with the remaining 45% stating that they were not aware of the Charter.
Charter importance
The event ended with a poll asking to what extent the Sustainability Principles Charter is likely to be a factor in selecting a bulk annuity provider for the schemes that attendees advise.
A third of respondents (33%) said, “Yes, for most of the schemes I advise” whilst 55% said, “it will be a factor for some of the schemes I advise, but not the majority” and the remaining 12% chose the option, “I do not expect this to be a factor for many/any schemes I advise”
Kerry King, Executive Director, Capital Markets, Accounting for Sustainability, who chaired the SPP event said;
“I was pleased to see that a majority of pension professionals are aware of the Sustainability Principles Charter. It was also really encouraging that 88% of those who responded to the polling agreed that sustainability would be a factor in their selection of a bulk annuity provider. This is very strong evidence of the increasing importance of sustainability in the decision-making process here.”
