The Pensions Regulator is urging U.K. defined benefit fund trustees to review any actions or contingency plans they might have in place in the event of a "no-deal" Brexit.
The regulator published Friday a statement on the U.K.'s exit from the European Union, set for March 29. A no-deal situation would see the U.K. leave the union at 11 p.m. Greenwich Mean Time on March 29 without a withdrawal agreement and a framework in place for the future relationship between the U.K. and the EU, becoming a so-called third country.
The statement, aimed at DB fund trustees, said that because corporate pension funds are "largely domestic in nature, we do not expect the U.K.'s departure from the European Union to have a significant effect in respect of the legislative basis under which schemes operate or trustees' ability to continue to administer their scheme effectively." This relates both to immediate effects that might arise in deal or no-deal scenarios.
However, TPR reminded trustees that they nevertheless should undertake a review of any actions or contingency plans for a no-deal outcome, if they have not already done so. TPR said it will provide an update on its expectations around managing risks from a pension fund perspective in relation to Brexit and the wider economic environment. That will be provided in the regulator's 2019 annual funding statement, set for publication in early March.
Trustees should also familiarize themselves with the Department for Work and Pensions' guidance on the payment of retirement benefits to EU citizens living in the U.K. and to U.K. nationals living in the EU in the case of no deal, TPR said.
Further, pension funds that are authorized and approved to accept cross-border retirement contributions, and those considering applying for such permissions, should also consider the implications of Brexit and how different scenarios would impact on them and participants.
"Leaving the EU with a deal remains the government's top priority. In the event that a deal is not reached the government needs to ensure we are prepared. TPR is working closely with the U.K. government, the institutions of the EU and, where relevant, pensions' authorities of member states to ensure that the position of authorized and approved cross-border schemes and their members is considered. This is the case in respect of the range of possible exit scenarios," the statement said.