The events of Q4 2022 have been a timely reminder that, no matter how well funded their defined benefit (DB) pension scheme, pensions risk is still very much a risk to the business (the sponsoring employer) that sits behind it.

Engagement: Human rights in the supply chain. With climate and emissions reductions high on the agenda, companies in the renewable space are prospering. Unfortunately, this can have big human rights implications.

Sustainability: Emissions are rising – and will continue to rise. Globally, we will emit more this year, than last year, and more next year than this year.

Covenant: Don’t get caught out by regulatory changes. 2023 is likely to be the biggest year for regulatory change in the defined benefit (DB) world since 2014 (the implementation of the Funding Code of Practice 03), or even since the Pensions Act 2004.

Macroeconomics: Patience will be required in 2023. Global investment markets start the New Year at a pivotal stage within the economic cycle. Many economies are transitioning from slowdown towards inevitable recession.

Investment solutions: Keep calm and carry on…just not like 2022. 2022 has been another year of surprises that tested pension schemes in new and varied ways.

Innovation: Is AI in the pension industry at an inflection point? Artificial intelligence (AI) and machine learning tools capable of analysing large data sets are becoming increasingly understood and accessible.

The great divide. Pension scheme trustee boards and sponsoring companies will wake up on 1st January in a very different place to where they were a year ago.

While many pension funds have made commitments to integrate ESG issues into their scheme journey planning, we think that there is further work to do. Here we provide a comprehensive overview of everything a trustee needs to know about how to incorporate sustainability into journey planning.

Cardano Group response. The draft Regulations are heading in the right direction in seeking to support trustees and employers in planning their scheme funding over the longer term and we are supportive of the intention to improve risk management through covenant-driven investment and funding strategies and a long-term objective of reducing reliance on covenant.

Pension risk transfer market: Entering unchartered territory. The UK pension risk transfer market is arriving at a unique juncture, driven by evolving supply and demand factors, regulatory change, and macroeconomic and capital market volatility. The impact on end game strategies could be far reaching.