Out-Law News | 24 Mar 2020 | 12:21 pm | 2 min. read
The guidance lays out ways for trustees, administrators and employers to mitigate the risk for their schemes and members and to manage increasing workloads caused by the crisis.
TPR said trustees need to assess business continuity plans and contact administrators or service providers to find out what contingency is in place to mitigate the impact of increases in work volumes or unavailable staff.
The regulator said they should prioritise actions such as pensioner payments, retirement processing and bereavement payments in the event of under-resourcing.
Trustees need to be vigilant and proactive in these challenging times.
TPR warned trustees that savers might be looking to transfer their pensions, prompted by instability of their employer or the financial markets. It said members should be warned of potential scams, adding that trustees should direct savers to the Financial Conduct Authority’s ‘ScamSmart’ service which has guidance relating to the Covid-19 virus, as well as to the Money and Pensions Service.
Pensions law expert Simon Tyler of Pinsent Masons, the law firm behind Out-Law, said the statement was welcome.
“The Pensions Regulator has recognised the pressure on employers trying to pay off deficits in defined benefit schemes in these difficult times. However, the guidance does not represent any great change in the approach to funding, rather it covers making use of the flexibility that already exists,” Tyler said.
“There are a number of steps pension schemes should now consider, both in response to the Pension Regulator's statement and generally to cope with the consequences of the virus outbreak. Trustees need to be vigilant and proactive in these challenging times,” Tyler said.
“The Pensions Regulator has indicated that it may introduce more measures in the future. It has not yet introduced some of the more stringent measures that some commentators had mooted, such as the suspension of auto-enrolment contributions – which is ultimately a matter for the government,” Tyler said.
TPR added that it would take a proportionate and risk-based approach towards enforcement decisions, with the aim of helping to get employers back on track and supporting both employers and savers.
Trustees and administrators are advised to report to TPR immediately if they believe they will be unable to pay members’ benefits. The regulator said everything else should be reported as normal, and it would take a pragmatic approach in its response.
The regulator also issued guidance for trustees of a defined benefit scheme where the sponsoring employer is at risk, or which has asked trustees to reduce or suspend the scheme’s deficit repair contributions. In the guidance, TPR highlighted the areas trustees should assess, and suggested trustees should get clarity on the timing for requests for contribution adjustments, challenging deadlines which are unnecessarily short and obtaining adequate information to make informed decisions.
TPR said it had also postponed the publication of its corporate plan, its long-term strategy, and its consultation on bringing together its codes of practice to form one single code. However, a consultation on defined benefit funding remains open, with timings to be reviewed in the coming weeks.
03 Mar 2020