TPR issues guidelines on Ukraine conflict

March 4, 2022

The Pensions Regulator (TPR) has issued guidelines to UK schemes in response to the conflict in Ukraine, which has led to investment market volatility.

In a statement, published on its website in the week of February 28, TPR said it expects trustees, employers, pension specialists and business advisers to be vigilant amid the ongoing conflict and its fallout. The TPR said schemes should talk to their advisers about any action they may need to take, depending on investment portfolios, risk management or employer covenant exposures.

Steps should be taken to consider any action that may be needed to align with sanctions announced by the UK government, including those in relation to investments, TPR said.

TPR is also encouraging defined benefit (DB) schemes to consider short-term liquidity needs, how those needs might be affected by margin calls and how they will meet short-term member benefit payments.

Further areas that the regulator expects DB schemes to think about is whether the employer or sponsor of the scheme has been affected, which may have consequences for the overall covenant.

According to TPR, schemes should also examine cyber safety procedures to see whether they remain adequate amid the potential heightened risk of cyber-attacks.

The potential for heightened risk of financial crime, including scams, and whether related processes and procedures should also be reviewed.

The Regulator also suggests evaluation of whether investments remain aligned with the policies and principles set out in statement of investment principles, including ESG considerations.

However, TPR said that while volatility can be concerning for schemes and savers, markets go up and down, and trustees and savers should keep the longer term in mind.

“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,” the Regulator adds.

The full guidance can be found on TPR website.

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