Pension fund The People's Pension shifts £28 billion from State Street due to discrepancies in stewardship responsibilities
The People's Pension Shifts Investments Away from State Street, Embraces Climate-Focused Strategy
The People's Pension, a UK defined contribution (DC) master trust with over £30bn in assets, has announced a significant shift in its investment strategy. The pension scheme plans to commit £4bn to private markets by 2030, with a focus on climate change stewardship and net zero transition plans.
In a move that reflects a broader industry trend, The People's Pension has reduced its investments with US manager State Street. This decision was influenced by a perceived misalignment on climate stewardship. State Street, ranked 63rd out of 70 in ShareAction's latest Voting Matters report, has shown little backing for social and environmental resolutions.
Amundi, the €2.2trn French manager, has been appointed to manage the People's Pension's £20bn passive equities portfolio. Amundi ranks 6th out of 70 in ShareAction's Voting Matters score, indicating a stronger commitment to ESG (Environmental, Social, and Governance) factors. Invesco will handle more than £8bn in active fixed income investments for the master trust.
The People's Pension had previously shifted the bulk of its passive equity holding into a climate-aware strategy managed by State Street, but now wants to go further. The shift towards investing through segregated mandates will provide the People's Pension with better control over its investments and stewardship approach. The pension scheme has built bespoke investment management agreements (IMAs) with net-zero commitments and custom exclusions.
The move away from State Street and towards Amundi and Invesco is part of The People's Pension's ambitious growth plan. The pension scheme aims to double its assets to £100bn over the next ten years, with a projected growth to £50bn within the next five years.
The expansion of The People's Pension's investment team to more than 20 members underscores its commitment to climate change stewardship. The pension scheme has been at the forefront of an initiative among long-term asset owners aimed at pushing managers to uphold their climate pledges.
The current trend among UK master trusts in long-term investment strategies strongly emphasizes climate change stewardship and net zero transition plans, reflecting rising regulatory and market expectations for sustainable investing. The People's Pension's recent decision to reduce investments with State Street aligns with this broader movement as master trusts increasingly focus on ESG factors within their portfolios.
The Pensions Regulator (TPR) announced in July 2025 a working group to develop a voluntary net zero transition plan template for occupational pension schemes, encouraging trustees to assess and manage climate-related risks proactively. Larger master trusts, including The People's Pension, are better positioned to adopt diversified, sustainable investment strategies due to scale, governance, and resources, reflecting a sector-wide move to integrate climate stewardship into long-term investment.
The UK government and regulatory bodies are strengthening their focus on pension schemes’ climate-related disclosures and transition planning, signalling that schemes like The People's Pension are responding to evolving regulatory frameworks and investor demand by refining their asset allocations and provider relationships. The emphasis on consolidation and scale in master trusts supports enhanced climate-related governance and investment expertise, enabling more impactful long-term stewardship of assets to address climate change risks and opportunities.
The shift towards investing through segregated mandates may send a signal to managers that asset owners are committed to their climate targets. The People's Pension has confirmed its net-zero strategy, but it is yet to confirm direct investments in climate solutions.
[1] The Pensions Regulator, Net Zero Transition Plan Template for Occupational Pension Schemes, July 2025, https://www.thepensionsregulator.gov.uk/-/media/project/net-zero-transition-plan-template-for-occupational-pension-schemes/net-zero-transition-plan-template-for-occupational-pension-schemes.pdf [2] The People's Pension, The People's Pension announces £4bn private markets commitment, January 2023, https://www.peoplespension.co.uk/media/news/2023/peoples-pension-announces-4bn-private-markets-commitment/ [3] The People's Pension, The People's Pension announces new investment team, January 2023, https://www.peoplespension.co.uk/media/news/2023/the-peoples-pension-announces-new-investment-team/
- The shift in The People's Pension's investment strategy towards climate change stewardship and net zero transition plans indicates a growing focus on environmental-science within the business sector, as they aim to allocate £4bn to private markets with such considerations in mind.
- As part of its ambitious growth plan, The People's Pension has aligned its finance decisions with its commitment to climate change, highlighting the intersection of climate-change and business, as it moves away from State Street and towards managers like Amundi and Invesco with stronger ESG (Environmental, Social, and Governance) commitments.
