A Sustainability Principles Charter for the bulk annuity process

Background

Accounting for Sustainability (A4S), The Church of England Pensions Board and Railpen have brought together pension funds, 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 funds and insurers.

The majority of occupational defined benefit (DB) pension schemes in the UK, representing £1.4 trillion in assets under management, are now closed, with many maturing on a path which considers transacting with a pension insurer.

Insurers, as well as pension funds and advisers, therefore play an increasingly important role in ensuring that pension investments are both resilient to the climate, nature and social crises that we face, as well as playing an active role in investing in a more sustainable world for pension members to retire into.

These four key principles are:

1. Transparency

Transparency of values, principles and investment beliefs in relation to sustainability, as well as ongoing commitments that may guide future policy and practice affecting sustainability approaches.

2. Decision making

Evidence and understanding of how sustainability considerations are incorporated into investment analysis and decision-making processes, and investment stewardship activity.

3. Reporting and Engagement

Ongoing reporting and engagement to key stakeholders on sustainability commitments beyond the point of transaction.

4. Collaboration

Commitment to ongoing engagement across the pension sector as responsible investment best practice evolves.