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Single code series #6 - What's new for investment under the new single code?

This article first appeared on Professional Pensions which can be seen at: What's new for investment under the new single code? (

When the single code (the code) is introduced, pension scheme trustees will need to consider several changes regarding investment, so it’s important that they start getting familiar with these now.

There are three new investment modules within the revised code - stewardship, climate change and the requirement to produce an implementation report. Here’s an overview of each, with some helpful tips on how to comply with them (assuming the code comes into practice as it’s currently drafted).

Implementation report

Implementation reports will replace the implementation statements which pension trustees currently produce and will expand on them to include information on the scheme’s assets and their performance over the year, as well as details of the trustees’ investment policies.

These additional disclosures are consistent with information which has historically been included in the investment section of a pension scheme’s annual report and existing policy details within the statement of investment principles (SIP). As such, the information to be included in implementation reports should be relatively straightforward to prepare – or at least no more taxing than in previous years!

As was the case with implementation statements, implementation reports will need to be prepared every year alongside the scheme’s annual report, and parts of it must be made available on a public website. We understand defined benefit (DB) and defined contribution (DC) schemes with less than 100 members will be exempt from producing these reports.

It’s worth noting the purpose of implementation reports is to provide scheme members with assurance that the scheme is running as it should be. This means the report should contain an appropriate level of detail (not just be a tick-box exercise) and the language used should be member-friendly and free from any jargon.


Most of the wording in this new module will be familiar to trustees as a result of existing pension scheme guidance and as such, most schemes should already be compliant with the majority of the requirements.

In general, pension schemes invested in equities typically do so through pooled funds and the so best way to influence the underlying companies is through the investment managers. To encourage managers to engage with companies, we recommend asking them to provide regular reporting on their voting and engagement activity, ideally including information on the purpose of their engagement, the expected outcomes and their progress over time.

Climate change

The new module on climate change echoes the Task Force on Climate-Related Financial Disclosures’ (TCFD) requirements for pension schemes, but without the more taxing quantitative elements. Trustees of DB schemes with assets over £1bn are already required to meet the full set of TCFD reporting requirements and so will not need to do any additional work to comply with this new module.

Trustees of pension schemes smaller than this are likely to have started considering the risks and opportunities associated with climate change when reviewing their scheme’s investment strategy and updating their SIP. They may now wish to start thinking about how to formalise and document this risk management process to comply with the code when it comes into force.

As part of this, trustees may wish to consider where responsibility for environmental, social and governance (ESG) policies and engagement should rest. For example, should it remain with the pension trustee board or should it be delegated to an investment or governance committee?

Other considerations for trustees and schemes

The rest of the investment element of the code appears to be the same as before, which means relevant governance processes should already be in place and necessary information covered in the SIP and other existing documentation.

For the purpose of preparing the investment section of the effective system of governance (ESoG) policy document, we suggest referencing existing scheme documentation where possible (such as the SIP, manager agreements and investment committee terms of reference) rather than drafting the policy wording from scratch. This would save time now (and in the future) when updating the policy and also reduces the likelihood of inconsistency between the various documents.

We would be happy to help pension trustees and sponsors with any compliance reviews, ESoG policy documents, implementation reports and own risk assessments - get in touch.



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