DB pension scheme trustees must look closely at insurers’ TCFD reports

Pensions consultant Hymans Robertson has urged DB pension scheme trustees to look closely at insurers’ Taskforce on Climate-Related Financial Disclosures (TCFD) reports. It said “the devil is in the detail” and to make informed decisions on buyouts, trustees must look at insurers’ actual progress in addressing climate risks. In its latest report, Spotlight: Insurer TCFD reporting and net zero targets, Hymans Robertson looks at how DB pension schemes can best use the information in insurers’ TCFD reports as they make decisions about choosing a firm to insure their members benefits. It assesses some of the key challenges they face when looking at the data and highlights that: “While many schemes might be encouraged by insurers’ headline targets and commitments, understanding which firm is a good fit for their needs will come from the ability to critically understand and assess the data in each TCFD report.” Paul Hewitson, head of ESG for risk transfer at Hymans Robertson, said: “Ultimately, for DB pension schemes who are on a journey to buyout but are also wanting to address climate risks, the devil is in the detail. Schemes could be forgiven for relying on the bolder statements in insurers TCFD reports. However, to really make an informed choice and choose a match that’s right for them, they should make sure they compare both how each insurer plans to transition their assets to meet targets, with the insurers’ actual progress.” He added: “The availability of this information now gives schemes the opportunity to make even more informed decisions, but it requires a focus on the long term. Instead of concentrating on the short-term goal of being fully funded to buyout, a consideration should be the role that insurers will play over a longer timeframe. As schemes become more familiar with the access to information in the TCFD reports, looking beyond the headlines should become second nature. In the meantime, as familiarity is being established, schemes will find decision-making easier if they note the differences between each insurers’ approach to how and what is measured.” Hymans Robertson stressed the importance of DB scheme trustees remembering the role of social and governance factors when assessing an insurance firm to partner with on a journey to buyout. “Trustees already assess firms by taking into account their approach across four key ESG factors: culture, integration, stewardship and transparency,” said Hewitson. “Insurers’ TCFD reports add an additional layer of information to aid their decision-making. By combining an understanding of all these factors, schemes should be able to maintain a thorough and informed longer-term view that will help them to fulfil their duty to act in the best interests of members. It will enable them to choose an insurer that they believe can fulfil the responsibility of paying its members’ benefits long into the future.”

DB pension scheme trustees must look closely at insurers’ TCFD reports

Want to read this article?

Read Next

Evolving modern slavery risk poses mounting supply chain challenges

R&Q confirms talks to sell Accredited

Continued rate hikes forecast for energy buyers: Amwins

Generali GC&C strengthens senior leadership in Asia

Sompo International names European head of cyber

Evolving modern slavery risk poses mounting supply chain challenges

R&Q confirms talks to sell Accredited

Continued rate hikes forecast for energy buyers: Amwins

Generali GC&C strengthens senior leadership in Asia

Sompo International names European head of cyber

Want to read this article?

Read Next

Evolving modern slavery risk poses mounting supply chain challenges

R&Q confirms talks to sell Accredited

Continued rate hikes forecast for energy buyers: Amwins

Generali GC&C strengthens senior leadership in Asia

Sompo International names European head of cyber

Related Articles