The Principles for Responsible Investment (PRI) is commissioning research on the extent to which the structure, policy and regulation of pension systems influence pension funds’ and providers’ ability to adopt responsible investment practices and allocate capital to sustainable economic activities.
The organisation said these aspects were currently not being considered by policymakers and the pension industry in the design of pension systems, but that its working assumption was that they had significant influence.
In a request for proposal (RFP) document, the PRI said it wanted to commission an organisation to examine the pension systems in Australia, the UK and the US.
The resulting report should include a review of the structure of each system and a “stakeholder chain analysis”, as well as a country-by-country analysis of barriers to responsible investment within investment practice, market structure, and policy and regulation.
Speaking on a panel at the PRI’s annual conference last week, Will Martindale, director of policy and research at the organisation, referred to fragmented pension systems with “a long tail” and low provider switching rates as examples of barriers to responsible investment by asset owners.
“But mostly we find that once you get to ESG you don’t go back,” he added.
In referring to “sustainable pension systems” the PRI was not referring to pension adequacy or the economic sustainability of a pension system, the RFP document stated.
“When we talk about sustainable pension systems we mean (1) the adoption of responsible investment approaches by pension fund boards and managers and (2) the allocation of capital to sustainable economic activities which contribute to prosperous and inclusive societies for current and future generations,” the PRI said.
According to the RFP, the research project should consider second pillar and personal pensions, although the Future Fund – Australia’s sovereign wealth fund – was within the scope of the research.
The PRI noted that, in the US and the UK, auto-enrolment had led to a sharp increase in the number of people saving for retirement as well as a surge in the number of pension schemes. At the same time, the UK was taking steps to consolidate private workplace pension assets through multi-employer defined contribution master trusts and defined benefit superfunds.
In Australia, the superannuation system had focused on consolidating schemes.
The deadline for applications to carry out the research is 30 September. According to the PRI’s timeline the final report would be delivered to the PRI in March next year. It has budgeted £30,000 (€33,567) for the research.
The request for proposal can be found here.