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.

As a covenant advisor in the post-2008 financial crisis world, I’ve spent the last decade focused on employer-related events and what they mean for the employer covenants within my trustee client base. Hamish Reeves, Director, Cardano Advisory.

Discover: AI powered covenant. Complexity and cost often put traditional covenant assessments out of reach for smaller schemes or scheme sections. This can be a problem given the importance of covenant to member outcomes, increased focus from The Pensions Regulator (TPR) on covenant, and draft DWP legislation requiring trustees to assess covenant strength.

We’re watching the COP 27 discussions from afar. In some respects, there were both reasons to be optimistic and pessimistic going into COP27. Here are our reflections on what has been going on.