The Pensions Regulator Gives No Breathing Space to Charities
There is no let up for charities and other third sector organisations during the Coronavirus outbreak as The Pensions Regulator's (TPR) updated guidance in response to the COVID-19 pandemic, emphasises 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”.
This follows suggestions that the government may consider relaxing the requirements for at least Automatic Enrolment Contributions following reports that a number of employers had been in touch to explore the possibility or pausing or reducing pension contributions.
Trustees' expectations in the face of the outbreak were also outlined, urging them to assess the adequacy of business continuity plans, 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.
It is highly unlikely any pension scheme trustees will have considered such a significant, detrimental event before and many will need to react very quickly to best support the sponsoring employer.
In updated guidance for administrators, TPR stated that COVID-19 had placed “huge additional pressures on the administration of pension schemes".
Trustees will need to consider the impact of debt funding on the sponsoring employer and any plan to clear a deficit.
Scheme Administrators should 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.
Scheme administrators and pension scheme trustees must be under no illusion, the rules have not changed, and they must report immediately if they believe their scheme may be unable to pay member benefits.
Sadly, the TPR guidance gives no steer on the approach trustees and sponsors should take for not yet completed 2019 valuations, and upcoming 2020 valuations, thereby leaving pension scheme trustees understandably nervous, which will have a knock on impact on the treatment the sponsoring charity will receive when there is a funding deficit.
There are undoubtedly going to be some very difficult conversations over the coming months between pension scheme trustees and charity trustees with no satisfactory resolution for some.
This is where we can assist. We are experts in negotiating suitable settlement arrangements between the two parties, whether that be inside or outside of a formal rescue of the charity itself.
Having performed the first ever rescue of a charity with both a defined benefit pension scheme deficit and a multi-employer shortfall, which involved the use of a Company Voluntary Arrangement (CVA) and the Pension Protection Fund, we are the leading experts in this field.
Contact Kevin Lucas firstname.lastname@example.org or Phil Ross email@example.com for more information.