TPR outlines expectations amid Russian invasion of Ukraine

The Pensions Regulator (TPR) has called on pension scheme trustees to be "vigilant" and talk to advisers about any action that may be needed in light of Russia’s invasion of Ukraine and subsequent global sanctions.

The regulator has outlined a number of expectations for pension schemes, stating that 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.

In particular, the regulator suggested that trustees for defined benefit (DB) pension schemes should consider their short-term liquidity needs and how those needs might be affected by margin calls and the need to meet short-term member benefit payments.

Trustees were also urged to consider whether the employer or sponsor of the scheme has been affected, with the regulator that this could have consequences on the employer covenant for DB schemes, and whether investments remain aligned with their statement of investment principles.

Further considerations identified by TPR include the likely impact of these events on scheme investments including short/medium-term risks, and whether cyber safety procedures remain adequate in light of the potential heightened risk of cyber-attacks in the current environment.

A heightened risk of financial crime, including scams, was raised as a further consideration, with trustees urged to consider whether related processes and procedures should be reviewed against this backdrop.

However, more broadly the regulator emphasised that whilst volatility may concerning for both savers and schemes, pensions are long-term investments held in a wide and diverse range of sectors and markets.

“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 stated.

However, the regulator acknowledged that there may also be an increase in concerns, or requests for information, from scheme members, suggesting that trustees prepare for this and be vigilant to the potential for scam activity.

“You should also consider whether to communicate with your members to let them know the steps you are taking to manage risks to the scheme,” it added.

“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.”

The regulator also called on trustees to inform it or any significant issues or challenges that schemes or sponsoring employers are facing as a result of the ongoing conflict, including financial hardship or direct or indirect exposure to investments subject to sanctions.

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