On 6 June, DWP published final legislation which will require changes to most occupational schemes' statements of investment principles (SIPs) and publication on a website of the SIP and annual report by all occupational schemes with at least 100 members.

The legislation comprises part of the UK's implementation of the European Shareholder Rights Directive II. The aim of the directive is to encourage investors to adopt a longer-term focus in their investment strategies. DWP's legislation seeks to achieve this by imposing additional disclosure requirements on existing occupational schemes with 100 or more members (ie private section schemes currently subject to the requirement to produce and maintain a SIP):

  • By 1 October 2020 (*): all such schemes must include additional statements in their SIPs. Most of these are regarding their relationship with asset managers including how the arrangement incentivises the manager to align its investment strategy with the trustees' policies. There are also some tweaks to the "engagement" requirements which were announced in 2018.
  • By 1 October 2020 (*): all such schemes must publish their SIP and annual report on a website available to the public. There is already a requirement for schemes with non-AVC DC rights to publish this information from 1 October 2019, so this is only a new requirement for DB schemes where the only DC rights relate to AVCs.
  • From 1 October 2020: all such schemes' annual reports must set out how their engagement and voting policies have been implemented and how they cast votes or, where relevant, made use of a proxy; with this to be published online by 1 October 2021 (*).

(*) New schemes, with 100 or more members set up within a year of the above dates have to comply straight away.

The transitional timing provisions are complex and the above reflects our understanding of what is proposed. In a welcome development, The Pensions Regulator will review and update its guidance to provide more details on what it expects of trustees.