The Norton Rose Fulbright pensions team surveyed those attending its latest webinar on four of the topics under discussion. We thought the outcome of the votes was interesting enough to share.

In the first part of the webinar, I talked about regulatory developments in ESG. I raised a specific concern of mine: that politicians and activists are trying to “recruit” pension schemes to various causes – and not just ESG causes, as the Chancellor’s Mansion House speech shows. I suggested that this puts pressure on trustees who, as we all know, are subject to fiduciary duties. Of our webinar participants, a sizeable 45% thought that this was a real issue, agreeing that movement on ESG is being held up because of concerns about encroaching on fiduciary duties. Now, I certainly do not think that ESG considerations and fiduciary duties are incompatible, but this perhaps indicates that some trustees out there would appreciate help navigating these waters.

My colleague Suzie Kemp then led us through the Regulator’s approach to diversity, equity, and inclusion. She detailed the rationale behind DEI, gave an overview of the Regulator’s recent guidance, and sought the audience’s view on whether it would make a difference. Interestingly, the audience was almost evenly divided between optimists (52%) and pessimists (48%). If, as seems likely, pessimists would be less likely to act in response to the Regulator’s guidance, then this (admittedly non-scientific) survey does not bode well for the Regulator’s agenda. It would be helpful to understand why there is such scepticism. Is the message not getting through, or is it even being rejected? Is guidance alone insufficient? We will be watching this space.

Suzie then turned to trends in enforcement by the Regulator. The question for the audience here was whether the Regulator’s new powers under the Pension Schemes Act 2021 – which include new tests for imposing contribution notices, the ability to impose financial penalties of up to £1m, and new criminal offences – had made any difference to its actual enforcement. 62% thought not. For us, this was surprisingly low: after all, the new powers have not actually (at least overtly) been used. On the other hand, there may be more than a hint here of Theodore Roosevelt’s strategy of “speaking softly and carrying a big stick”, with the Regulator engaging constructively with trustees and employers whilst holding its new powers in conspicuous reserve.

Finally, I discussed the most recent annual funding statement. Much has changed over the year. With sticky inflation, sluggish growth, low unemployment, and high interest rates we may be in for a new normal. Part of that normal is much improved funding levels for schemes; some analysts have suggested that as many as one fifth are in surplus on a buy-out basis. In such a different world, do we still need a new DB Funding Code, something first mooted five years ago? The audience was once again rather evenly divided, with 55% saying yes and 45% saying no. We tend to the latter view and so will be interested to see how (if at all) the next iteration of the draft funding regulations and code reflect the changed landscape. I think if there is one key takeaway from our brief survey, it would be this: leaving aside trustee DEI for a moment, there is certainly diversity of thought within the pensions industry!