Pensions Talks Interview: Eleanor Daplyn and Andy Lewis, Partners at Sackers

This month, we caught up with Eleanor Daplyn and Andy Lewis, Partners at Sackers, who offered valuable insight into the upcoming Pension Schemes Bill, the need for trustees to prepare for dashboards, the impact of the US SEC's crackdown on ESG investments, the benefits of new multiple employer CDC schemes, and how AI is enhancing productivity and efficiency.

1. Pensions Minister Torsten Bell has confirmed a Pensions Bill will land before the summer recess, likely on the final Pensions Investment Review and key proposals from the King’s Speech. What is the Pension Schemes Bill expected to have in store on DC?

• Far-reaching initiatives for DC are expected.  The Bill won’t have all the detail but will lay the framework to tackle three big problems:

• Problem 1 – people’s money is scattered amongst multiple pensions, making it hard to manage it well.  Small deferred DC “pots” of under £1,000 to be defaulted to a consolidation vehicle.

• Problem 2 – pension schemes aren’t all providing genuine value.  A new Value for Money (VfM) framework requiring schemes in scope to report on performance and take steps to address poor value.

• Problem 3 – members are left too much on their own when it comes to accessing their pension savings.  A positive duty to offer a default retirement income solution or range of solutions – as opposed to now when members have multiple complex decisions to make and no-one is obliged to support them.

   

2. Now onto Dashboards. Finally, here and the first cohort of schemes are due to connect by April 30. What should trustees be doing to prepare? 

The Pensions Dashboard Programme announced on 17 April that the first provider had completed connection – to join them smoothly:

• Liaise closely with your administrator and make sure your contract covers what you need.

• Keep on top of the decisions you need to take, and keep a clear audit trail – a decision log will be your best friend here.

• Don’t forget AVCs!  Liaise with your providers.

• Take extra care with data protection.

   

3. "Greenwashing" and misleading claims about ESG investments, with the Securities and Exchange Commission (SEC) taking the lead. What are the implications for pension schemes of the US “crackdown” on ESG?

   The ESG picture in the US is rapidly evolving.  Towards the end of 2024 there were a number of SEC enforcement actions or settlements with corporates and asset managers relating to “greenwashing” (where disclosure statements about ESG were alleged not to align with a product or service as actually delivered).  Yet the SEC has also disbanded its dedicated ESG and climate taskforce, industry coalitions have restructured or ceased, and political and legal challenges to ESG have become quite prominent.

   This does not change the current position under UK law, where pension schemes remain subject to extensive ESG duties and disclosures.  Indeed, some UK schemes are positively reaffirming their ESG investment beliefs following developments across the pond.  It is too early to say whether the backlash is here to stay.  But clearly there is a delicate commercial balance here – particularly for those with a connection into the US.  “Greenhushing” (retaining ESG policies but being less vociferous about them) might be discussed, though this carries its own set of legal considerations.

    

4. Last week, the government announced new regulations, set to be laid in the Autumn, allowing for multiple employer CDC schemes to be established. This will mean that a range of unconnected employers can pool their employees’ pension pots into a collective fund, boosting returns for savers. Do you think this will deliver better outcomes for future pensioners?

   CDC has enormous potential – not only could it allow pooling of investments (with possibly improved returns), but the risk that available funds can’t support the pension is borne collectively rather than by each member individually.  Scale is going to be critical – any given CDC arrangement needs scale to achieve the efficiencies that make the concept work, and if CDC is going to change UK pensions, then it needs to be broadly accessible to employers which is why unconnected multi-employer CDC is such an important and exciting development.

    

5. AI is the buzz word, and as more companies adopt AI technology to increase productivity and efficiency for their business. How are you using AI in you day to day job? 

   We have our own chatbot (named “Harry” after Harry Sacker, our founding partner) and we’re also conducting pilots for the use of AI tools within externally provided software.  These can be really useful in a range of work, such as legal research, drafting documents and running projects – but we do always have to be mindful of the risks (such as AI “hallucinating” results) and ensure that it’s being used transparently, and in our clients’ best interests.