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New guidance published for DC investments

Ref: PN19-27

Issued: Thursday 27 June 2019

Updated DC Investment Guidance has been published by The Pensions Regulator (TPR) today.

The guidance now incorporates regulations which come into force from October 2019 and October 2020 and responds to industry requests for further guidance in certain areas. 

David Fairs, Executive Director of Regulatory Policy, Analysis and Advice at TPR, said: “Good governance and the management of investment risk in pensions schemes is fundamental to provide savers with a good retirement.

“Climate change is a core financial risk which trustees will need to consider when setting out their investment strategy. They will be obliged to show how they are taking this and other financially material considerations into account over the lifespan of investments.

“This guidance provides updates as well as clarity for trustees, including considerations when planning scheme investments.”

Guy Opperman, Minister for Pensions and Financial Inclusion, said: “Pension schemes have a significant part to play in tackling the climate emergency. They should be thinking about how they can meet the long-term interests of their members by driving new investment in important sectors of the economy – helping to deliver sustainable environments, jobs and communities.

“I welcome The Pension Regulator’s updated guidance which follows the government’s game-changing regulations clarifying and strengthening pension scheme trustees’ environmental, social and governance responsibilities.”

The guidance has been updated to reflect recent changes to legislation for DC schemes:

  • Trustees must make their Statement of Investment Principles (SIP) - a scheme’s investment strategy - available free of charge on a website from October 2019.
  • From October 2020 trustees must produce an implementation report which explains how trustees have followed and acted on the investment policies outlined in the SIP.
  • The SIP must include the trustees’ policies on:
    • financially material considerations including environmental, social and governance matters such as climate change
    • stewardship of investments, such as exercising rights (including voting rights) and engaging with activities in respect to the investments
    • the extent to which members’ views, including ethical, social and environmental, are considered when planning investments
    • arrangements with asset managers

The updated guidance also provides further clarity around what is meant by financial material considerations, stewardship and provides more information about preparing an implementation statement.

Notes for editors

  1. The Statement of Investment Principles (SIP) sets out a scheme’s investment strategy, including the investment objectives and investment policies.
  2. Trustees of trust-based occupational pension schemes with at least 100 members are required by law to prepare a SIP and ensure it is reviewed at least every three years and without delay after any significant change in investment policy. Written advice should be taken when a SIP is prepared and reviewed.
  3. TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of TPR’s functions under Part 3 of the Pensions Act 2004 only).

Press contacts

Kimberly Middleton

Media Officer (DC)
01273 349554

Matt Adams

Senior Media and Parliamentary Manager
01273 662086

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