David Fairs, executive director of regulatory policy at The Pensions Regulator, said that while schemes might make decisions on their long-term investment plans for Russia, there are challenges with both finding a buyer and being paid.
Several of the U.K.'s largest pension schemes had already taken steps to scale back investments in Russia ahead of the country's invasion of Ukraine, but many more still have limited assets in the country. The government has urged company bosses to weigh whether their investments are supporting the invasion.
Fairs said in a webinar hosted by consultancy XPS Pensions Group that there were also practical considerations that would impede divestment, namely U.K. sanctions introduced at the start of the month that prohibit transactions with the Russian central bank, as well as other individuals or organizations with links to the state.
"In terms of transacting, there are two challenges," he said. "The first is finding a buyer for assets that is free of the sanctions regime, and then there's a question of how you actually settle investments."
"To all intents and purposes, from a practical point of view it's not possible to divest," he said. "But trustees may want to do so if and when that becomes possible."
Chancellor of the Exchequer Rishi Sunak said Monday that asset managers should "think very carefully about their investments in Russia" and whether they aid in the country's invasion of Ukraine.
In the webinar, Bernardine Adkins, partner and head of EU trade and competition at law firm Gowling WLG, said the best option might simply be to hold onto such assets.
"It is extremely problematic," she said. "By and large for people with asset tabs in Russia, it may be that you simply have to put some dust sheets over them."
The webinar followed advice by The Pensions Regulator on Sunday saying trustees should not make "hasty, uniformed decisions" over long-term investments following the invasion.
Fairs said Monday that trustees needed to give paramount importance to their fiduciary duties to their scheme members.
"A lot of members would probably like trustees to make a moral decision based on what's happening in Ukraine," he said. "But while trustees can take account of member views, they must take account of the fiduciary interests of members and what's in their financial best interest."
--Editing by Brian Baresch.
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