Changing how we think of fiduciary duty could unlock sustainable investment and engage members.
At our Wednesday Wisdom session, Julius Pursaill explained how NatWest Cushon’s legal opinion with Eversheds gives trustees a new framework for considering UK investments – one that recognises pensions should help build the world members will actually retire into.
The opinion says trustees must consider how investments affect members’ standard of living in retirement, not just their pot size. For an industry struggling with member engagement, this could change everything.
Why pension trustees must now think beyond pot size
Julius explained why NatWest Cushon needed this legal interpretation. They wanted to invest in UK hospitals, wind farms and social housing. But up until now, traditional fiduciary duty has only focused on maximising the money in your pension pot.
The Eversheds opinion changes that. It says trustees must consider how investments affect members’ standard of living in retirement. Not may: must.
Julius “always thought it was perverse” that trustees would chase an extra £100 for the pot even if it meant members retired into failing healthcare and crumbling infrastructure.
This isn’t about choosing lower returns. It’s about recognising that retiring with slightly more money means little if you’re spending it all on private healthcare because the NHS has collapsed.
Engage members by showing them their investments
Julius shared his famous golden eagle example:
“Imagine your pension app pings while you’re at the pub. It shows golden eagle chicks hatching on land your pension helped reforest. Those are your chicks.”
This isn’t just nice storytelling. It’s addressing a fundamental problem: pensions are an ‘intangible promise’ decades away. No wonder members don’t engage. But show them wind farms they own, hospitals they’re building, homes for nurses they’re funding? That creates emotional connection today.
This chimes with Quietroom’s own video showing how much members care about their money being invested in ‘good things’.
NatWest Cushon’s data shows an impressive 70% to 75% of members activate their app within 3 months.
The commercial logic is clear. Emotional connection drives what Julius calls ‘task persistence’. Members who care about their pension take action. They increase contributions. They make better decisions.
The legal difference between standard of living and quality of life
Michael Jones from Eversheds explained the legal mechanics. The distinction between ‘standard of living’ and ‘quality of life’ makes this work.
Standard of living includes objective financial measures: GDP per capita, infrastructure quality, healthcare access. These are financial factors trustees must consider.
Quality of life is subjective. It involves personal preferences and lifestyle choices. These remain non-financial factors that are difficult to consider.
This distinction matters. It keeps the opinion within the frameworks that trustees understand, while dramatically expanding what they are permitted to do.
Michael emphasised they haven’t dismantled the financial/non-financial distinction that took decades to establish. They’ve just been clear about what sits where.
Should pension law change to reflect climate risk?
What about current efforts to put this into law by amending the Pensions Bill? We heard strong arguments for statutory change. Many large schemes still aren’t considering climate risk properly. Clear legislation would force action.
But Julius pushed back on the idea of new legal obligations. In today’s political climate, with Trump as president and Farage potentially becoming the future PM, progressive legislation could be reversed. “They’ll change the law back,” he warned.
His alternative is to show trustees accurate climate damage models, so they can see that the financial case is undeniable. The problem isn’t the law, it’s that current models underestimate risks and opportunities.
How trustees can balance returns with societal benefit
The practical challenge emerged quickly. How do trustees actually weigh these factors? Traditional duty is simple – more pounds in the pot. But this new approach requires judgement about societal benefits.
Julius acknowledged the difficulty: small schemes might struggle to trace their impact. But consolidation will change everything. When you’re one of 5 or 6 ‘universal owners’, your investment decisions genuinely affect UK society.
Michael added that scale enables 2 approaches:
- Direct causation – investing in healthcare reduces members’ future costs, or
- Systemic risk management – ensuring the UK remains a decent place to retire
The challenge isn’t theoretical. It’s about making decisions where benefits are “difficult to trace, difficult to quantify” but undeniably real.
What pension professionals need to know next
If both the legal opinion and proposed legislation aim to consider living standards, which approach works better?
Julius worried the proposed wording actually weakens the position. It says trustees ‘may’ consider living standards. The opinion says they ‘must’.
Asset managers wanted to know about data requirements. How can the industry provide evidence for emotional connections and societal benefits? Julius said automation and better impact reporting are essential. Managers who can show tangible local benefits will win mandates.
What happens when pension schemes become universal owners
Several forces are converging. Mansion House signatories need to justify UK investments. The push for scheme consolidation creates universal owners. And value for money assessments are changing.
Julius expects rapid change once evidence emerges. If NatWest Cushon proves that UK tangible assets can drive member engagement and better outcomes, others will follow. But you need 3 things: modern technology, genuine customer service, and the right assets.
For now, progressive trustees have legal cover to think differently, while conservative trustees can wait for more evidence. But the direction is clear.
Members want pensions that build the world they’ll retire into. This opinion lets trustees deliver that. The question isn’t whether this approach will spread, but how quickly.
As Julius put it, this creates value “in the here and now”. For an industry struggling with engagement, that might be the most radical change of all.
