The Pensions Regulator has extended some areas of easing to help U.K. plan sponsors that continue to be challenged by the COVID-19 pandemic, but it wants trustees to restart certain reporting duties.
The U.K. regulator updated guidance for trustees of defined benefit funds receiving requests to suspend or reduce deficit repair contributions from sponsoring employers that are grappling with the impacts of the coronavirus on their businesses.
Since the outbreak of the coronavirus pandemic, about 10% of plan sponsors have sought to delay deficit recovery contributions, an agreed-upon amount that is injected into a company's pension fund to help plug a deficit.
TPR in March granted companies a three-month period during which it said it would not take action on reduced or suspended deficit recovery contribution payments.
However, starting July 1, trustees must resume their reporting of key information to the regulator, including whether contributions were suspended or reduced since the onset of the pandemic and whether recovery plans were not fulfilled.
"COVID-19 has had a huge impact on us all and so during this unprecedented time we have continued to listen and talk to trustees and employers," said Charles Counsell, CEO at TPR, in a news release.
"In making decisions on regulatory action, we will continue to do so on a case-by-case basis and take a flexible and pragmatic approach where breaches are COVID-19 related. As such, we feel the resumption of some reporting is now important," Mr. Counsell added.
Multiemployer plans, known in the U.K. as master trusts, will also return to formal reporting starting June 30. They will have to notify TPR of all significant events from that date.
And defined contribution and automatic-enrollment providers will be given 150 days to report late payments of contributions, an extension from the previous 90-day requirement. TPR will review the extension at the end of September.
"Trustees will be put to the test," said Mike Smedley, partner at pensions advisory business Isio, in an emailed comment. "This is likely to lead to some tough talk at the table as management seeks to justify their rationale for contribution suspensions."
Wayne Segers, partner at advisory firm XPS Pensions, said in a separate emailed comment: "The economic impact of the necessary response to COVID-19 is likely to affect employers and pension schemes for a while yet. The Pensions Regulator has highlighted this in extending measures, but expects trustees to carry out more due diligence than before — especially when agreeing to reduce cash contributions. This may reflect an expectation that trustees should now have adapted to managing schemes in a COVID-19 world."
