For much of the past two decades, the task facing trustees and investment teams of defined benefit (DB) pension schemes was clear: repair deficits, manage risk and achieve funding stability.

That discipline remains vital. But the world pension schemes now operate in has changed fundamentally, and so too must the way we think about investment strategy.

The defining challenge today is not risk in the traditional sense. Risk can be modelled, hedged and priced. What schemes increasingly face instead is uncertainty: events that are difficult to predict, often interconnected, and capable of reshaping markets at speed.

Geopolitical conflict, inflation shocks, technological disruption, energy security, demographic change and climate risk now interact in ways that do not sit neatly within conventional asset class- or ESG frameworks.

Against this backdrop, resilience should be the organising principle for long-term pension investment strategy.

Understanding strategy resilience

Resilience is not about trying to forecast the next crisis. It is about ensuring that a portfolio, and the systems around it, can withstand and adapt to a wide range of investment environments and shocks while continuing to meet obligations to members.

Crucially, resilience goes beyond preserving value under stress. It also means retaining the capacity to evolve and capture opportunity as conditions change.

This perspective matters because uncertainty ebbs and flows and the pace of change is accelerating. Some risks dominate for a period, only to fade as others emerge.

These forces do not operate in isolation, and they rarely arrive one at a time. A resilient investment approach therefore requires continuous monitoring, prioritisation and adjustment, not a fixed checklist.

Sustainability, resilience, and fiduciary duty

For many schemes, sustainability has historically been the lens through which long-term risks were considered. Climate change, in particular, has rightly received significant attention. But an overly narrow interpretation of sustainability can be limiting.
Energy security, food security, infrastructure resilience, geopolitical fragmentation, regulatory change and technological disruption may not always be labelled as ESG risks, yet they are central to pension scheme funding outcomes.

What unites them is that they are long-term risks with a wide range of potential outcomes. They are difficult for markets to price, often interconnected, and their importance changes through time.

They also affect the main risk factors relevant to most pension schemes: expected investment returns, real interest rates and longevity assumptions. As a result, the link to fiduciary duty is clear.

“The challenge now is not to choose between growth, security, or sustainability, but to integrate them within a coherent framework that recognises uncertainty as a permanent feature of the investment landscape.”

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