Occupational Pensions (Governance and Reporting on Climate Change) Regulation 2022 (amendment, modification and transitional provision)

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Regulatory texts
2022 No.
Pensions

Made ***
Tabled before Parliament ***
Coming into force October 1, 2022

The Secretary of State for Work and Pensions, in the exercise of the powers conferred by Articles 41A (1), (2), (3) (a) and (b), (4), (5) and ( 6), 41B (1) and (2), 124 (1) and 174 (2) and (3) of the Pension Act 1995[footnote 1], establishes the following regulations.

Pursuant to Section 120 (1) of the Pensions Act 1995, the Secretary of State has consulted with such persons as he deems appropriate.

Citation, beginning, scope and interpretation

1 .— (1) This regulation may be cited under the title Regulation 2022 on occupational pension schemes (governance and reporting on climate change) (amendment, modification and transitional provision) and enters into force on 1 October 2022.

(2) These Regulations extend to England, Wales and Scotland.

(3) In this Regulation, “the Main Regulation” means the 2021 Regulation on occupational pension schemes (governance and reporting on climate change)[footnote 2].

Modification of the Main Rules

2 .— (1) The Main Rules are amended as follows.

(2) In the appendix, part 1 (climate change governance requirements, etc.) –

(a) in paragraph 15—

(i) at the end of subparagraph (b) omit “and”;
(ii) after sub-paragraph (b) insert:

“(Ba) a measure of portfolio alignment; and”;

(b) after paragraph 19, insert:

“19A. The trustees must, for each plan year, to the best of their ability:

(a) obtain the data necessary to calculate the alignment metric of their selected portfolio;
(b) use the data obtained to calculate this metric against the assets of the system; and
(c) use the metric they calculated to identify and assess climate-related risks and opportunities that are relevant to the program. “;

c) in paragraph 21, after “paragraphs 18”, insert “, 19A”;

(d) in paragraph 26—

(i) in the definition of “additional climate change measure”, at the end, insert “or a portfolio alignment measure”;
(ii) after the definition of “greenhouse gas” insert—

“Portfolio alignment measure” means a measure that aligns program assets with the climate change goal of limiting the increase in global average temperature to 1.5 degrees Celsius above pre-industrial levels; “

(3) In the Annex, Part 2, paragraph 27 (n) (information on measures to be included in a report under Article 6), after “paragraphs 18”, insert “, 19A”.

Modification of the Main Regulations

3 .— (1) The following modifications apply to trustees of a trust plan who, under Rule 3 (1), 4 (1) or 5 (1) of the Main By-law (trustees to whom governance of climate change, etc. apply), must comply with the requirements of part 1 of the annex to this regulation before October 1, 2022, and which remain subject to the requirements on that date.

(2) For the purposes of the modifications made by rule 2 (2) (a) of these Rules, paragraph 15 of the annex to the Main Rules should be read as if it were “the first year of the plan for to which the requirements of this part apply ”have been replaced by“ the plan year which is in progress on 1 October 2022 ”.

(3) For the purposes of the modifications made by rule 2 (2) (b) and (c) of these Rules, paragraph 21 of the annex to the Main Rules should be read as if:

(a) “the first plan year for which the requirements of this Part apply” has been replaced with “the plan year that is in progress on October 1, 2022”;
(b) for “this first plan year” have been replaced “this plan year”;
c) “any day before the requirements apply” has been replaced with “any day before the requirements of paragraph 19A apply”.

Transitional provision

4 .— (1) The modification made by regulation 2 (3) does not apply to a plan year that ends before October 1, 2022.

(2) For the purposes of these regulations, “plan year” has the meaning given to it by Article 2 of the Main Regulations.

Signed by the authority of the Secretary of State for Work and Pensions

name
Dated
Parliamentary Under-Secretary of State
Department of Work and Pensions

Explicative note

(This note is not part of the Rules)

This Regulation makes amendments and modifications to the 2021 Regulation on Occupational Pensions (Governance and Climate Change Reporting) (SI 2021/839) (“the Main Regulation”). The Regulations also provide for a transitional provision.

Regulation 2 (2) amends part 1 of the annex to the main regulation (climate change governance requirements, etc.) to introduce a requirement that administrators must select and calculate a portfolio alignment metric for the assets of their plan.

A portfolio alignment metric is a metric that gives the alignment of program assets with the goal of limiting the increase in global average temperature to 1.5 degrees Celsius above pre-industrial levels.

Regulation 2 (3) amends paragraph 27 (n) of Part 2 of the Schedule to the Main Regulation (information on actions to be included in a report under Regulation 6), to require trustees to include specified information on their portfolio alignment measure in the report they are required to produce and publish under rule 6 of this regulation.

Bylaw 3 makes changes to Part 1 of the Schedule to the Main Bylaws for Trustees who were subject to the requirements of Part 1 of the Schedule before the date of entry into force of this Instrument and who remain subject to the requirements. to this date.

Regulation 3 (2) amends paragraph 15 of the schedule to the main regulation to provide that for the purposes of the amendments made by regulation 2 (2) (a) of that instrument, subsection 15 should be read as requiring that Trustees choose a portfolio alignment metric in the plan year that is current on October 1, 2022, rather than in the first plan year for which the requirements of Part 1 of the schedule apply. The amendment is being made because for these Trustees, the first plan year for which the requirements of Part 1 apply may have already passed when this instrument comes into effect.

Rule 3 (3) amends paragraph 21 of the Schedule to the Principal Regulations to provide that for the purposes of the amendments made by Rule 2 (2) (b) and (c) of this instrument, paragraph 21 should be read as applicable with respect to the current plan year of October 1, 2022. This ensures that paragraph 21 will apply with respect to the first plan year in which the Trustees are required to select and calculate the portfolio alignment metric.

Article 4 provides for a transitional provision. It provides that the amendment made by Article 2 (3) of this instrument does not apply to a plan year ending before 1 October 2022. Trustees are not required to calculate an alignment measure of portfolio in plan years ending before October 1, 2022. Regulation 4 therefore provides that the amendment made by Regulation 2 (3) – which would require administrators to include specified information on the portfolio alignment measure in the report that they must produce and publish under Regulation 6 (1) of the Main Regulation – will not apply. under these years of regime.

[A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sectors is foreseen.]


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