TPR 'recognises and shares' climate scenario concerns

The Pensions Regulator (TPR) has said that it “recognises and shares” concerns that some climate scenarios may show impacts that seem at odds with established science, stating that it expects data, methodology and tools to continue to continue to evolve.

Industry research previously raised concerns that "flawed" climate analysis could be placing pension savers at risk, arguing that a common methodology for climate scenario analysis is needed to allow for a like-with-like comparison.

Commenting in response to these concerns, TPR director of regulatory policy, analysis and advice, Louise Davey, said that while climate-related risk is an evolving area, reports on scenario analysis suggested that the industry must evolve faster and trustees must be ready to challenge their advisers.

She stated: “We recognise and share concerns that some climate scenarios may show impacts that seem relatively benign and appears to be at odds with established science.

“We expect data, methodology and tools to continue to evolve. We expect trustees to address data shortcomings and modelling limitations found in their initial rounds of scenario analysis and to seek improvements.”

Davey also discussed these issues during a recent industry podcast, adding: "Trustees really need to be quizzing their advisers on the scenarios being put before them.

"We are talking very long term, but the focus has to be on savers outcomes, and those outcomes will be in 30-40 years time, and so we do need to be thinking along those timescales."

Davey argued that it is also "really important" to have research such as this to enable debate in the industry, highlighting the reports as a welcome contribution to a complex area that has a direct impact on savers’ outcomes.

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