The Pension Regulator allows defined benefit schemes to delay transfers by up to three months
30 March 2020
In response to the ongoing COVID-19 crisis, The Pension Regulator (TPR) has published new guidance which will allow employers to temporarily cease their defined benefit (DB) responsibilities for a period of up to three months. DB schemes will also be able to delay member requests to transfer out of the scheme for the same period.
The moves are aimed to provide trustees with a longer timeframe in which to calculate Cash Equivalent Transfer Values (CETVs), due to the economic uncertainty caused by coronavirus. There have been significantly more requests for CETVs which has placed pressure on the teams responsible for providing such calculations. It is hoped that the three-month delay will give schemes sufficient time to focus on other tasks such as pension payroll and retirement quotations.
It will also make it harder for individuals to be targeted by scammers, who prey on the vulnerable in times of crisis, and to prevent rash financial decisions being made as a result of concern over the spread of the virus.
The guidance from TPR states that, where absolutely necessary, employers and scheme trustees could place pension funding payments on hold and delay submission of recovery plans where such information is currently expected by the regulator.
Guidance released a week earlier stated that a suspension or reduction in the contributions to DB plans “may be appropriate” but this has since been altered to state that trustees “should be open” to requests of this nature.
The Financial Adviser reported that the executive director of policy at TPR, David Fairs, said:
“The significant measures and clear guidance we are announcing reflect the unprecedented and challenging situation trustees and employers find themselves in.
The current scheme funding regime is flexible enough to cope with the impact of a severe economic downturn. However, we are actively considering what additional support and guidance we need to provide now so that those who manage and contribute to people’s savings can take the right steps to ensure adequate protection, recognising the challenging situation some scheme sponsors are in.
We will continue to take a reasonable, pragmatic and proportionate approach in the weeks and months ahead and we call on trustees to follow the guidance closely to make well-balanced decisions.”
Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.