The UK’s pensions regulator (TPR) has published guidance for trustees in relation to the war in Ukraine, noting that some schemes and trustees were already reviewing “any exposure risks because of the wider impacts”.

It said it expected trustees to be vigilant and talk to their advisers about any action they may need to take, depending on their scheme’s investment, risk management or employer covenant exposures.

TPR also said trustees should take steps to consider any action they may need to take, including in relation to investments, to align with sanctions announced by the UK government.

With the caveat that “we recognise that this is a rapidly-evolving situation”, TPR identified areas it expected trustees to consider including:

  • for defined benefit (DB) schemes, the short-term liquidity needs and how those needs might be affected by margin calls and the need to meet short-term member benefit payments;
  • whether the employer or sponsor of the scheme has been affected, which for DB schemes may have consequences for the employer covenant: for example through wider trading links where suppliers or customers are impacted, or through broader macroeconomic factors such as increased inflation, rising fuel prices or foreign exchange risks;
  • the likely impact of these events on your scheme’s investments including short/medium-term risks; and
  • whether investments remain aligned with the policies and principles set out in your statement of investment principles, including environmental, social and governance considerations.

TPR also said trustees and savers both have the longer term in mind.

“Aside from any short-term actions in relation to Russian investments due to divestment, sanctions, or change in appetite in relation to holding these investments, this means not making hasty, uninformed decisions about your overall portfolio,” it said.

“You may see an increase in concerns, or requests for information, from scheme members, and so should prepare for this and be vigilant to the potential for scam activity,” it added.

The regulator also told trustees they should also consider whether to communicate with their members to let them know the steps they were taking to manage risks to the scheme.

“You can help them by urging them not to rush decisions and providing them with clear, relevant and timely information so they can make informed decisions,” said TPR.

The regulator’s intervention coincides with the Local Government Pension Scheme Advisory Board for England and Wales (LGPS SAB) today publishing a note with information about Russian sanctions and divestment.

Read the digital edition of IPE’s latest magazine

Susanna is deputy news editor at IPE. At IPE she covers responsible investment and EU regulation, but also enjoys reporting on developments in and around the UK pensions industry. Having been a financial journalist since 2008, Susanna started her career as a corporate governance/corporate social responsibility analyst at proxy advisory firm PIRC.View full Profile

More from Susanna Rust

Topics