TPR publishes updated COVID-19 guidance

The Pensions Regulator (TPR) has published updated guidance in response to the COVID-19 pandemic, emphasising that “employers need to continue contributing” throughout the outbreak.

The regulator has stated that that it will take a “proportionate and risk-based approach towards enforcement decisions, in light of these challenging times”, also acknowledging the strain put upon employers by the outbreak.

This follows suggestions that the government may consider relaxing the requirements following reports that a number of employers had been in touch to explore the possibility or pausing or reducing pension contributions.

The regulator also outlined its expectations for trustees in the face of the outbreak, urging them to assess whether business continuity plans are still adequate, and to work with administrators to confirm what contingency plans are in place.

It has also called on trustees to confirm priority order in the event of under-resourcing, stressing the need to communicate this with administrators and providers.

Commenting on the updated guidance, PWC senior pensions adviser and partner, Stephen Soper, said: “Many trustees will not have undertaken contingency planning for such a severe scenario especially if the sponsor was previously healthy.

“Trustees will need to react quickly to best support the sponsor.

"They should seek to understand the level of government support available - if any - and other emergency actions such as new debt which will be key to the survival of the sponsor.”

In updated guidance for administrators, TPR stated that COVID-19 had placed “huge additional pressures on the administration of pension schemes".

It advised administrators to prioritise the payments of benefits, retirement processing, and bereavement services, focusing next on the processes needed to ensure accurate benefits, such as the investment of contributions.

Both trustees and administrators have been urged to report immediately if they believe their scheme may be unable to pay member benefits, with TPR stating that it will take a “pragmatic approach” in response to such reports.

However, “the guidance doesn't address the approach trustees and sponsors should take for not yet completed 2019 valuations, and upcoming 2020 valuations", highlights PwC pensions partner, Paul Kitson.

The University Superannuation Scheme recently reported itself to TPR following a funding measure breach, while Aon has also warned trustees to expect difficult valuation negotiations this year.

"Many trustees and sponsors will want certainty here and we expect to hear more from the regulator on this in due course," he adds.

Following a 400 per cent surge in coronavirus related scams reported to Action Fraud in March, the regulator has however, included guidance to help trustees protect members from scams throughout the outbreak.

It stated: “Savers might increasingly look to transfer their pension, prompted by the instability of their employer or the financial markets.

“This means they could be increasingly targeted by scammers attempting to lure them to ‘safe havens’. If a saver asks about transferring their pension, urge them to exercise extreme caution and visit ScamSmart which has specific guidance relating to COVID-19.”

Trustees are also encouraged to direct members, particularly those approaching retirement, to the Money and Pensions Service.

Kitson concluded: “It’s important that pensions continue to get paid, and that pensioners remain protected from scams.

“At the moment the main administrators appear well placed to deal with COVID-19 and many have kicked-in their business continuity plans.

"So far, these seem to be working well, but this will be a marathon rather than a sprint and it is important that trustees and sponsors ensure that their pension scheme administrators remain supported to operate over the coming weeks and months.”

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