The government sees stewardship as a key tool by which pension trustees “can improve investment returns, by encouraging, developing, and supporting behaviours and practices that ensure long-term value for savers”. 

However, it felt that the concept of stewardship was “widely misunderstood” and an area “where existing policies and reporting appear to be weakest”. So, on 17 June 2022, the DWP published new stewardship guidance.

Current obligations

Since 2019, trustees of pension schemes with 100 or more members (with certain exceptions) must:

  • in their statement of investment principles (SIP), publicly state their policy on the exercise of rights attaching to their scheme’s investments, and on undertaking engagement activities in respect of those investments; and

  • through an annual implementation statement (IS), report on the extent to which they have adhered to their voting policies and how they have voted.

(DC and hybrid schemes have to produce a wider IS, covering how and the extent to which they have followed all of the policies set out in their SIP.)

However, there was little guidance on these documents or stewardship generally, and the industry felt that the lack of clarity about expectations prevented them from being a positive tool. Therefore, the DWP has issued this guidance that aims to improve the quality of policies, develop best practice for reporting and improve consistency across schemes’ practice.

New guidance

While stewardship encompasses a range of activities (asset allocation and asset manager appointment being other examples), the guidance focuses predominantly on voting and engagement. It expands on the current requirements, setting new expectations – and nudges trustees towards playing a more proactive role.

The guidance contains both statutory and non-statutory guidance: trustees must have regard to the statutory guidance when complying with IS requirements; the non-statutory guidance, which includes guidance on SIPs, highlights best practice. The statutory elements come into force for scheme years ending on or after 1 October 2022, but schemes should bear best practice in mind with immediate effect.


Amongst other things:

  • The guidance introduces the concept of stewardship priorities and themes, and gives some examples (climate change and corporate governance being obvious ones). Trustees must identify their priorities (as appropriate to their scheme) and engage with asset managers in relation to them.

  • Stewardship policies should focus on voting and engagement. Voting policies should cover schemes’ own or (more likely) their asset managers’ voting behaviour, including how trustees will monitor, review and intervene or challenge these where necessary – see part 2 and part 3 of our series for some top tips. The guidance sets out helpful examples of engagement activities.

  • The IS should record how the scheme’s “most significant” votes (by topic, or size of holding) are cast, and their alignment with the chosen stewardship priorities. The guidance details the content the IS should cover here.

  • The guidance does not contain a vote reporting template, as respondents favoured an industry template; however, the government believes that existing templates (from the PLSA and the Investment Consultants Sustainability Working Group) “could benefit from further development”.

Separately, the guidance looks at schemes’ consideration of financial versus non-financial factors – a line that is “not always clear”. The government “encourages trustees, if it is practical to do so, to keep under review non-financial factors that may not immediately present as financially material but have the potential to become so, particularly for schemes with a long-term horizon”. This will be a key issue for schemes to work to understand.


The guidance addresses the “how” of reporting, as well as the “what”, including:

  • reporting should be tailored and not a tick-box exercise;

  • while the Pensions Regulator (TPR) is the primary audience for SIPs and ISs, both documents should be understandable to a wide audience, written in plain English as far as possible, and schemes should consider producing summary versions for members (linking to the full document); and

  • alignment with the UK Stewardship Code: the guidance references the code principles and indicates areas of potential alignment between these and schemes’ disclosure obligations.


What should schemes prioritise?

  • Update your training on stewardship generally, including the new DWP guidance and TPR’s investment guidance and industry recommendations (see, for example, the PLSA and IA’s recent report)

  • Make time for stewardship in your agendas

  • Review and refine current stewardship policies and expressions of wishes

  • Engage with asset managers on a regular and proactive basis

  • Watch out for further stewardship guidance in TPR’s forthcoming single code of practice

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2022. Specific advice should be sought for specific cases. For more information see our terms & conditions.

Written by

Sasha Butterworth

Sasha Butterworth

Date published

15 July 2022

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