We are focused on the protection of savers however, it is right that we maintain our pragmatic approach so that trustees and employers are supported as they meet the challenges ahead.
Our updated guidance continues to provide provision for Defined Benefit (DB) scheme trustees to agree to suspend or reduce deficit repair contributions (DRCs), to help employers come through the challenges of COVID-19.
While our data shows that around 10% of DB schemes have sought to defer DRCs, with discussions ongoing for others, we recognise there is a continuing need to support trustees and employers in this way.
Trustees remain the first line of defence in protecting savers and our guidance also clarifies what we expect from them. From 1 July, trustees should resume reporting information to us. This will help us to look ahead, identify risks and take action where we need to, to protect savers.
Trustees should continue to be open to requests from employers to delay DRCs but we expect due diligence to be carried out. We want to gain greater insight into the employers’ short-term liquidity developed since the COVID-19 lockdown began and we expect trustees to report on:
- Suspended or reduced contributions – we will expect a revised recovery plan or a report of missed contributions.
- Late valuations and a recovery plan not agreed.
- Delays in Cash Equivalent Transfer Value (CETV) quotations and payments.
From 30 June, we also expect Master Trusts to return to issuing a formal report to notify TPR for all triggering and significant events.
The continuing economic uncertainty means that savers are vulnerable to making rushed decisions about their money and this leaves them at risk of pension scammers.
Our guidance continues to remind trustees that they should continue to issue a letter template to all members requesting a CETV quote. The letter is jointly prepared by TPR, the Financial Conduct Authority and The Money and Pensions Service, and it contains important information about what members should consider before making a decision, and where to go for additional information and advice.
Other key guidance updates
Our guidance also reminds trustees that we are continuing to take a pragmatic approach to annual benefits statements. We know the impact of COVID-19 means schemes need additional time to issue these statements to members. These easements will continue until 30 September – along with easements around trustees reporting failures to provide audited accounts – we will not take enforcement action in this respect.
The legislation around chair’s statements does not allow discretion in relation to enforcement, so we will continue to impose fines if schemes don’t comply with this requirement. However, this is only in relation to breaches before 31 March and we do not expect to be reviewing statements before the autumn.
And, in respect of automatic enrolment, we are continuing to support employers by maintaining the increased period of late payment reporting by providers from 90 to 150 days. The increased reporting period means employers have more time to work with their scheme to bring late or missing payments up-to-date so staff receive the pensions they are due. Information about this is included in our updated guidance for employers in respect of the Coronavirus Job Retention Scheme, which is in line with government guidance.
We will continue to review and update our COVID-19 guidance and trustees and employers should regularly refer to it to ensure they are aware of the support available, and what we expect of them, as we work together to continue to protect savers through these unprecedented challenges.
This article was featured in Pensions Aspects magazine July/August edition.
Last update: 27 January 2021