Government to issue new pension guidance

The government is preparing to consult on new guidance relating to fiduciary duty, with the chair of its advisory board calling for constructive engagement from the industry. Sir Robin Knowles, a High Court judge, emphasized that trustees should have the confidence to make decisions that will survive challenge.

He believes they should make the best decision, not the decision that’s least likely to be open to challenge.

A public consultation on the guidance is expected later this year. The Department for Work and Pensions (DWP) appointed a technical working group in March to inform its plans to issue guidance, which will be non-statutory in nature.

Sir Robin noted that the guidance will still carry weight because it has come from the sector as a whole, and will have the attention and respect of regulators and the courts. The guidance will give trustees more clarity on what they can take into account when making investment decisions.

The underlying principles of trustees’ fiduciary duty will remain the same – to act in the best interests of pension scheme members. However, the breadth of what is recognized as financially material is widening, encouraging trustees to evaluate complex, long-term risks through a robust decision-making framework.

Pensions minister Torsten Bell emphasized the importance of clear, practical guidance for pension trustees, who steward billions of pounds on behalf of millions of savers. Andy Cork, a partner at law firm A&O Shearman, highlighted that the guidance has been led by industry, and the SPP will continue to engage on the issue to ensure the final guidance provides certainty for trustees.