United Kingdom's pensions watchdog set to draft a model for transition strategies

In a significant move towards sustainable investing, the UK's Pensions Regulator (TPR) has announced plans to create a voluntary template for occupational pension schemes to transition towards a net-zero economy by 2050. This initiative comes as pressure mounts on pension funds worldwide to take climate change risks into account.

Julian Lyne, TPR's interim executive director of market oversight and chair of the planned working group, emphasised that sustainability initiatives should improve investment governance practices and aid in making long-term strategic decisions. The working group, which includes representatives from pension scheme professionals, trustees, actuaries, scheme administrators, and professional organisations such as the Pensions Management Institute (PMI) and the Institute and Faculty of Actuaries (IFoA), will be responsible for developing and testing the template.

The TPR's template for transition plans will be based on the framework and guidance developed by the Transition Plan Taskforce (TPT). This voluntary template is expected to help pension trustees manage transition risks, such as potential falls in the value of investments in fossil fuels, ahead of any legislation.

The TPR aims to work with the industry to help pension trustees capitalise on investment opportunities and promote sustainable investment. According to TPR, transition plans could also help trustees capitalise on investment opportunities and promote sustainable investment. This could potentially see the UK pension industry investing £1.2tn into renewable energy and climate solutions by 2035, as stated by the Make My Money Matter campaign.

The campaign also reports that two-thirds of UK pension holders support their funds investing in renewables, while £88bn of UK pension savers' money is currently invested in fossil fuels. The TPR has been working to raise awareness among trustees about the benefits of transition plans, indicating that these plans have the potential to influence investment decisions in the interest of savers.

Last year, a review conducted by TPR revealed that over 60% of climate-related disclosures by pension trustees contained a net-zero goal. This shift towards sustainability is not limited to the UK, as the Labour party in Britain has promised to mandate transition plans aligned with the Paris Agreement's goal of limiting global temperature rises to 1.5C in its pre-election manifesto.

This article was last updated on July 10, 2025. The TPR intends to present the developed template to the government later this year.

United Kingdom's pensions watchdog set to draft a model for transition strategies