In response to the COVID-19 crisis, The Pensions Regulator ("TPR") announced a number of temporary regulatory easements. However, with 30 June 2020, the initial deadline for many of those temporary regulatory easements now fast approaching, what do scheme trustees need to know?
This article provides a brief overview of the latest guidance from TPR.
Updated guidance
TPR has published a number of updates to its previous guidance, explaining how it will continue to adapt its regulatory approach and provide guidance for trustees dealing with difficult decisions in light of the impact from COVID-19.
In its updated guidance on reporting duties and enforcement activity, TPR has confirmed that the extended allowance of 150 days (instead of 90) for reporting late contribution payments. This will be reviewed again at the end of September.
There will be no further extension of the other relaxations meaning that usual reporting duties that were paused in response to COVID-19 will resume from 1 July 2020.
DRC suspensions and reporting requirements
Trustees of defined benefit schemes that approved suspensions to deficit reduction contributions ('DRC') will have to report to TPR on this and provide the scheme's updated recovery plan. We previously blogged on DRC suspension requests and points that trustees need to consider in deciding whether to grant such a request. TPR has reiterated its call to action to employers in relation to maintaining communication with their scheme's trustees and providing information in a timely manner.
TPR expects that the majority of trustees will now be able to access more detailed financial projections from employers, in assessing any new or continuing DRC requests. However, there may still be some schemes where financial visibility is still not possible. TPR expects trustees to have a critical eye to any additional extension request to DRC suspension, it may be that a further extension is appropriate, but due diligence is required. Trustees must also consider the scheme's covenant and any updates needed to the scheme's funding arrangements, if there have been substantial changes to the scheme's covenant.
If there has not been a revised recovery plan agreed, this will also need to be reported, as will failure to produce audited accounts and any delays in cash equivalent transfer quotations.
Chair's Statements
TPR will recommence reviewing Chair's Statements ('CS') from 30 September 2020. However, trustees should note that whilst a CS will not be reviewed until 30 September, this does not affect the requirement to submit the CS on time. TPR has confirmed that it has no discretion on imposing fines where the CS requirements are not complied with, and that it will not be able to give any assurances about unreviewed CSs that are submitted prior to 30 September. To ensure that you have the latest information on CS requirements, read our update on the new template for CSs here.
Supporting scheme administrators
Recognising the extra strain that scheme administrators are under currently, in their recent blog TPR is encouraging trustees to support administrators to ease matters where possible, by: using electronic signatures where appropriate; reducing demand on call centres by promoting online alternatives; modifying procedures for getting discretionary benefits agreed, and also around cashflow polices.
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