Just 5-10 per cent of scheme sponsors may be planning to take advantage of deficit reduction contribution (DRC) suspensions at present, the Society of Pension Professionals (SPP) has estimated.

The estimation is based on a recent survey of SPP members which revealed that the majority (55 per cent) did not expect any of their clients to suspend or reduce DRCs.

However, the remaining 45 per cent expected to see activity in this area, with 27 per cent of respondents expecting take up of 10 per cent or higher.

The SPP clarified that whilst this means the majority of sponsors do not need to suspend or reduce contributions, for those that do it is a “valuable lifeline”.

It also warned that while numbers are “low at the moment”, they could increase over time as the impact of lockdown is felt by more, and more severely.

The survey also revealed that, despite recent easements from The Pensions Regulator (TPR),only a minority of schemes had opted to suspend transfer values, with over half (62 per cent) of respondents stating that no pension schemes were suspending transfer activity,

Furthermore, of those who had seen changes in transfer activity, just 9 per cent of respondents thought that more than 25 per cent of schemes were suspending quotes or payments.

Governance and operating procedures were also highlighted as “one of the most immediate challenges for pension schemes”, with trustee meetings historically having being held infrequently and face-to-face.

The SPP report stated: “In a rapidly changing and virtual environment, trustees have had to adapt their behaviours quickly.

“On the face of it, it is perhaps surprising that, on average, only about 50 per cent of schemes have called special meetings.

“However, in a typical month around a third of pension schemes will have a meeting scheduled in any case, and for larger schemes there will also be sub-committees meeting more frequently.

“Anecdotally, our conclusion is that many schemes have managed the current crisis within their existing governance framework.”

The findings also echo recent research from the Pensions and Lifetime Savings Association, which revealed that 99 per cent of schemes had found their current contingency plans were coping well.

Adding to this, the majority (64 per cent) of respondents stated that less than 25 per cent of schemes had put any substantial amounts of work on hold in light of the current crisis.

The SPP emphasised that this was “reassuring”, highlighting that whilst there are extreme cases, such as one trustee chair who was asked to suspend all pension scheme activity on the basis that it is “non-essential to the business”, most firms recognise that this activity must continue throughout the crisis.

The SPP have warned instead, that the real challenge will be in returning to normal, highlighting that the suspension of projects in Q1 and Q2 will inevitably mean more pressure down the line.

This follows warnings from Lane Clark and Peacock partner, Stephen Taylor, that trustees must give careful consideration as to how any delayed contributions will be recovered after the current crisis.

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