The first fine against a pension scheme for failing to publish a report on trustees’ management and governance of climate-related risks and opportunities has been issued by The Pensions Regulator (TPR).
TPR fined the ExxonMobil Pension Plan £5,000 for failing to meet new regulations, developed from the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).
The scheme’s trustees highlighted that although the report had been produced by the deadline, it was not published due to an administrative error.
Schemes in scope of the regulations must publish their climate change report by a set deadline on a publicly available website so savers can be assured trustees are making decisions which take into account climate risks and opportunities.
To monitor compliance, TPR investigated the publication of all climate change reports, a total of 80 in the first year. After being unable to locate the Exxon Pension Plan report online, TPR contacted the scheme trustees. The report was published six days later.
The matter was resolved in July 2023 when Exxon paid the penalty, which was issued in May 2023.
A report into the action taken against the scheme has been published today (Thursday) to remind trustees about the regulations, which came into force in October 2021 to improve pension scheme governance and reporting of climate-related risks and opportunities.
It comes as TPR publishes its latest compliance and enforcement bulletin, showing how it used its powers from January to June 2023. Schemes including Exxon, which receive a penalty for failing to publish their climate change report, will now be named in the bulletin.
Nicola Parish, TPR’s Executive Director for Frontline Regulation, said: “In our role to protect savers, we take climate change requirements extremely seriously. Our case against the ExxonMobil Pension Plan shows we will and must act by using the mandatory fining regime set out in law.
“This will continue as we analyse the second phase of climate change reporting, when smaller schemes will be required to report.
“The case serves as a warning to trustees about the importance of having proper governance and oversight where third parties are carrying out tasks on their behalf.”
Use of automatic enrolment powers remains consistent
The latest bulletin shows that in respect of its automatic enrolment (AE) powers, TPR issued:
- 25,106 Compliance Notices compared to 28,027 in the previous period
- 15,994 Unpaid Contribution Notices compared to 17,962 in the previous period
- 17,178 Fixed Penalty Notices compared to 18,897 in the previous period
- 7,944 Escalating Penalty Notices (EPN) compared to 7,492 in the previous period
TPR continues to name employers who have been issued with certain categories of fines for AE breaches, including those who have been made subject to a court order after failing to pay an EPN. However, in this edition of the bulletin, the focus is on those employers who have received the largest fines.
Also for the first time, TPR is publishing a regional breakdown of its AE enforcement data, showing where in the UK penalty fines have been issued in the first six months of 2023.
“Naming serves as a deterrent”
Director of Automatic Enrolment, Mel Charles, said: “Our use of AE powers has remained broadly consistent during the six months to June compared with the previous six months, with minor variations reflecting the profile of large cohorts of small and micro employers due to redeclare in that period.
“While the vast majority of employers are complying with their AE duties, this bulletin demonstrates the enforcement action we take, where necessary, to protect savers.
“Naming those employers who have received the largest fines we’ve issued in certain categories, including some as high as £52,500 in this period, serves as a deterrent to other employers by raising awareness of the consequences of non-compliance.
“Our ability to publish information, including data that drives our enforcement activity, such as the new regional breakdown of our enforcement data, not only ensures we are transparent but helps educate those we regulate about our decisions and actions.”
In respect of the use of TPR’s frontline regulation powers, the total number of statutory powers used was 263 compared to 215 in the previous six-month period.