On the go: The Pensions Regulator is working on fresh guidance regarding employer covenant, which may emerge in autumn of this year.
At the Pensions and Lifetime Savings Association’s ESG conference on March 10, Alex Darsley, an actuary at TPR, and Brendan Walshe, a member of the watchdog’s investment consulting team, were asked if the regulator would be looking to provide more guidance on how to assess climate risk within covenant.
Earlier in March, the regulator urged trustees to consider any impact from the Russia crisis on the health of their schemes’ sponsoring employers and any subsequent impact on covenant.
“We are developing some new guidance on covenant right now. It’s general covenant guidance, but it will have much more on climate change,” Darsley replied.
Walshe added that the guidance would be tied to the upcoming defined benefit funding code and mooted an autumn arrival.
While Russia’s invasion of Ukraine has largely created noise around divesting and freezing Russian holdings, employer covenant has surfaced as another consideration for trustees during the crisis.
In an earlier conference session, Pete Searle, the Department for Work and Pensions’ policy director for private pensions and arm’s length bodies, highlighted TPR’s guidance for trustees over Russia and the issue of employer covenant, pointing to employers “who could be hit potentially quite dramatically by this”.
“That’s potentially quite an important dimension, and in some cases a more worrying dimension,” he warned.
