Between 5 and 10 per cent of sponsoring employers have been requesting to suspend deficit recovery contributions (DRCs), according to The Pensions Regulator (TPR).

In a webinar hosted by XPS Pensions Group, TPR executive director for regulatory policy, analysis and advice, David Fairs, stated that, although experience “seems to vary a little”, between “5 and 10 per cent of organisations are asking to suspend DRCs”.

“Clearly the longer the current situation persists then that might change. That is information that we are gathering and keeping a close eye on,” he added.

This follows XPS’s findings that 12 per cent of pension schemes in its client base have requested contribution suspensions for their employers.

“The evidence that we’ve seen from professional trustees and other advisers is not dissimilar to your findings,” Fairs noted.

XPS senior consultant, Stephanie Cole, commented: “While that [12 per cent] is a minority, it is quite a significant number and I think sadly it is plausible that number will increase quite bit further in the coming weeks and months.

“It’s probably not surprising to see that the majority of those requests from employers are in relation to deficit reduction payments, often the most significant of employer’s costs to a pension scheme.

“At any point when I’m working with and advising trustees about agreeing a contribution schedule, I’ll be strongly recommending that those trustees have a very strong understanding of the covenant that their employer provides to the pension scheme.”

Cole also revealed that XPS had seen around of quarter of the schemes across its client base looking to suspend the payment of transfer values.

“I think it is worth noting that about 76 per cent are continuing to pay transfers,” she added.

Fairs noted that TPR had seen a “mixed” experience for pension schemes in relation to transfer value requests.

He stated: “For some pension schemes there has been no increase in requests for transfer values, in some cases here has been a reduction due to volatility. In some schemes virtually no change in demand, in others there has been a really significant increase.

“There are also some concerns that where those large increases in requests come through, it’s because there is scam activity. In those cases, it’s quite right and appropriate that trustees look really hard at the request for transfers and look to see if scams are in operation and look to protect members as much as they can.”

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