Ukraine crisis – guidance for pension scheme trustees

The Pensions Regulator has published guidance for trustees on what it expects them to do and think about in light of the conflict in Ukraine

New guidance from the regulator says that pension scheme trustees should “be vigilant and talk to … advisers about any action which you may need to take, depending on your scheme’s investment, risk management or employer covenant exposures”. Trustees should also consider “any action you may need to take – including in relation to investments – to align with sanctions announced by the UK government”.

The areas the Pensions Regulator expects trustees to consider include:

  • “short term liquidity needs and how those … might be affected by margin calls and the need to meet short-term member benefit payments” (defined benefit schemes);
  • any impact on the scheme employer (“for example, through any direct impacts to employer operations, 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”);
  • likely impact on scheme investments, and whether those investments “remain aligned with the policies and principles set out in your statement of investment principles, including environmental, social and governance considerations”;
  • whether “cyber safety procedures remain adequate or need further consideration”; and
  • processes and procedures around the risk of financial crime, including scams.

The guidance also says that trustees should:

  • prepare for “an increase in concerns, or requests for information, from scheme members … and be vigilant to the potential for scam activity”; and
  • consider communicating with members “to let them know the steps you are taking to manage risks to the scheme.. [and] … help them by urging them not to rush decisions and providing them with clear, relevant and timely information so that they can make informed decisions”.

Open Trustees comment

Trustees should consider this guidance and discuss it with their scheme advisers.  The Pensions Regulator is also inviting trustees to engage with them and them to understand the impact of the conflict on pension schemes.