Ocean-related risks have the potential to threaten retirement incomes by affecting pension scheme assets, liabilities and contribution levels, according to a report from the Institute and Faculty of Actuaries (IFoA), the University of Exeter, and The Ocean Race.

The report, Ocean Maelstrom: Navigating the Climate Storm, warned that ocean risks were already severe and worsening, but remained a significant blind spot in many economic and financial assessments, despite the ocean's role in supporting climate stability, food systems and global trade.

The report's 'Ocean Maelstrom' scenario explored how interacting ocean, climate and geopolitical risks could cascade through food production, global trade, insurance, sovereign risk and financial markets.

It suggested that some impacts could emerge within years rather than decades, making them relevant to current investment and risk-management decisions.

A pensions case study showed how ocean degradation could affect scheme assets, liabilities and contributions simultaneously. Weaker investment returns, higher inflation and pressure on employer and household finances could combine to affect scheme funding and the adequacy of future retirement incomes.

The report said ocean recovery is possible, but governments and financial institutions must close the gap between commitments and delivery.

It makes a range of recommendations including developing financial structures that enable capital to support ocean resilience and systemic-risk reduction.

Other recommendations include adopting realistic risk-assessment frameworks that include ocean degradation risks, integrating Ocean Solvency into government, regulatory and financial decision-making, stronger policy enforcement and investment into ocean protection and restoration, and closing the “say-do gap” between international commitments and delivery.

Commenting on the report, IFoA president, Paul Sweeting, said: “The health of our oceans should be a concern not only for environmental policymakers, but also for governments, regulators, investors and pension funds.

He explained that actuaries had developed a Planetary Solvency Recovery Framework in collaboration with academics and climate scientists, setting out how realistic risk assessments could support the stability and resilience of the Earth system.

He continued: “Now we need coordinated efforts to apply this framework to our oceans, to restore ocean health so that it can continue to fulfil the essential functions upon which society and the economy depend.”

Lead author and Trust Risk Consulting founder, Sandy Trust FIA, added: "The ocean is critical infrastructure for our economy, but it remains largely invisible in economic and financial risk assessments. That is a dangerous blind spot.

“Ocean recovery is possible, but commitments must now translate into delivery. Governments and financial institutions need to recognise the risk, strengthen resilience and direct more capital towards protecting and restoring ocean health.”

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