Brexit will not result in any significant change to the UK pensions legal framework.

However, the financial volatility caused by the resulting uncertainty has increased scheme investment risk. In addition, falling gilt yields have had a negative impact on scheme funding.

Trustees may also become concerned about the impact of Brexit on the strength of the employer covenant and seek safeguarding strategies around investment and risk management.

Practical next steps for trustees include focusing on integrated risk management as a way of understanding and managing risks and discussing issues with professional advisors. In addition, schemes that use derivatives or swaps should check the terms of those agreements, especially around counterparty rating downgrades / termination triggers and calls on collateral.