Policy paper

Pension funds and social investment: interim response

This is the government’s interim response to the Law Commission’s report on pension funds and social investment.


Pension funds and social investment: interim response

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In November 2016, the government asked the Law Commission to look at how far pension funds may or should consider issues of social impact when making investment decisions.

The Law Commission’s report found there are no substantive regulatory barriers to making social impact investment by pension funds. Most of the barriers are in fact structural and behavioural, including the need for clearer legislation and guidance.

This is the government’s interim response to the report. It provides government’s first view of the Law Commission’s recommendations and areas in which it is considering taking action. It includes plans to clarify legislation around:

  • consideration of broader long term financial risks
  • pension schemes’ ability to consider members’ non-financial or ethical concerns
  • the role of engagement alongside voting as an important aspect of stewardship of pension scheme assets

A number of the Law Commission’s proposals are the responsibility of regulators. In these cases, government is working with the relevant parties as they consider the recommendations.

The Department for Digital, Culture, Media and Sport and the Department for Work and Pensions will continue to work together and with stakeholders, within government and externally, to provide a full response to the Law Commission’s report by June 2018.

Read the Law Commission report – Pension funds and social investment

Published 18 December 2017