Governance and reporting of climate-related risks and opportunities

1. Background
2. Governance
3. Strategy and scenario analysis
4. Risk management
5. Metrics
6. Targets
7. Publishing your report
8. Appendix 1: a step-by-step example of following the climate change guidance
9. Appendix 2: when schemes are subject to the requirements

Appendix 2: when schemes are subject to the requirements

Use this page to discover when your scheme is subject to the requirements of The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 and The Occupational Pension Schemes (Climate Change Governance and Reporting) (Miscellaneous Provisions and Amendments) Regulations 2021.

You will need to consider the following two tests:

• The 'relevant assets’ test
• The ’authorised schemes’ test

The relevant assets test

Trustees must meet the governance and reporting requirements of the regulations in relation to their pension scheme if the scheme has ‘relevant assets’ of at least a certain amount at the end of a scheme year that ends on or after 1 March 2020.

According to The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021:

• 'relevant assets' means:
  1. in the case of a scheme in respect of which the trustees are required to obtain audited accounts, the total of the amount of the net assets of the scheme recorded in the audited accounts for the scheme year less the value of the assets of the scheme represented by any relevant contract of insurance recorded in those accounts
  2. in the case of a scheme which is an ear-marked scheme, the value of the assets of the scheme represented by any policies of insurance or annuity contracts that are specifically allocated to the provision of benefits for individual members or any other person who has a right to benefits under the scheme, less the value of the assets of the scheme represented by any relevant contract of insurance
• 'relevant contract of insurance' means a contract of insurance entered into by the trustees of the scheme with an insurance company regulated in the United Kingdom by the Prudential Regulation Authority where:
  1. the contract is an annuity contract which has secured the provision of a pension in payment to or in respect of a scheme member and, at all times before coming into payment, that pension was a benefit falling within section 181B(2) of the Pension Schemes Act 1993; or
  2. the contract provides for payments to be made by the insurance company which are intended, irrespective of future financial market conditions or scheme member longevity, to meet the cost of benefits specified in the contract
     1. which are not money purchase benefits under section 181(1) of the Pension Schemes Act 1993; and
     2. which are or will become payable to or in respect of a scheme member
        

The requirements apply where a scheme has relevant assets of:

1. Meet the governance requirements:

   • from 1 October 2021, or (if later and the scheme is not an ear-marked scheme) from the date on which the trustees obtain audited accounts for that scheme year, to the next scheme year-end; and
   • subject to (c) below, during every subsequent scheme year

2. Meet the reporting requirements:

   • within seven months of the end of the first scheme year in which the trustees had to comply with the governance requirements; and
   • subject to (c) below, within seven months of every subsequent scheme year-end

3. If your scheme's relevant assets fall below £500m on any subsequent scheme year-end date:

   • you will cease to be subject to the governance requirements from that date
   • you must still publish a TCFD report for the scheme year which has just ended (within seven months of the scheme year-end date) unless one of the exceptions in regulation 6(2) of the regulations apply
   However, if the scheme subsequently meets either the asset value test or the authorised schemes test, then you will again become subject to the governance and reporting requirements.

1. Meet the governance requirements:

   • from 1 October 2022 or (if later and the scheme is not an ear-marked scheme ) from the date on which the trustees obtain audited accounts for that scheme year, to the next scheme year-end; and
   • subject to (c) below, during every subsequent scheme year

2. Meet the reporting requirements:

   • within seven months of the end of the first scheme year in which the trustees had to comply with the governance requirements; and
   • subject to (c) below, within seven months of every subsequent scheme year-end

3. If your scheme's relevant assets fall below £500m on any subsequent scheme year-end date:

   • you will cease to be subject to the governance requirements from that date
   • you must still publish a TCFD report for the scheme year which has just ended (within seven months of the scheme year-end date) unless one of the exceptions in regulation 6(2) of the regulations apply
   However, if the scheme subsequently meets either the asset value test or the authorised schemes test, then you will again become subject to the governance and reporting requirements.

1. Meet the governance requirements:

   • from the beginning of the scheme year which is one scheme year and a day after that scheme year-end date, to the end of that scheme year; and
   • subject to (c) below, during every subsequent scheme year

2. Meet the reporting requirements:

   • within seven months of the end of the first scheme year in which the trustees had to comply with the governance requirements; and
   • subject to (c) below, within seven months of every subsequent scheme year-end

3. If your scheme's relevant assets fall below £500m on any subsequent scheme year-end date:

   • you will cease to be subject to the governance requirements from that date
   • you must still publish a TCFD report for the scheme year which has just ended (within seven months of the scheme year-end date) unless one of the exceptions in regulation 6(2) of the regulations apply
   However, if the scheme subsequently meets either the asset value test of the authorised schemes test, then you will again become subject to the governance and reporting requirements.

The authorised schemes test

Trustees must also meet the governance and reporting requirements if their pension scheme is an authorised master trust or an authorised collective money purchase scheme.

1. Meet the governance requirements:

   • from that date until the next scheme year end; and
   • subject to (c) below, during every subsequent scheme year

2. Meet the reporting requirements:

   • within seven months of the end of the first scheme year in which they had to comply with the governance requirements; and
   • subject to (c) below, within seven months of the end of every subsequent scheme year

3. If your scheme subsequently ceases to be an authorised master trust or authorised collective money purchase scheme, the reporting requirements may cease to apply:

   • If the relevant assets of the scheme were less than £500 million on the scheme year-end date immediately preceding the scheme year in which authorisation ceased, the requirements for governance and reporting will immediately cease.
   • Otherwise, the requirements will continue to apply unless your scheme’s relevant assets fall below £500 million on a subsequent scheme year-end date, in which case:
     • you will cease to be subject to the governance requirements from that date
     • you must still publish a TCFD report for the scheme year which has just ended (within seven months of the scheme year-end date) unless one of the exceptions in regulation 6(2) of the regulations apply
   However, if the scheme subsequently meets either the asset value test of the authorised schemes test, then you will again become subject to the governance and reporting requirements.

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Appendix 1: a step-by-step example of following the climate change guidance

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