Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Employment UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (March 30, 2020, 5:28 PM BST) -- The Pensions Regulator will not take enforcement action against companies that fail to make contributions to workplace pensions over the next three months, in a bid to ease the burden on businesses already struggling under the COVID-19 crisis.
The watchdog said Friday trustees should weigh the financial health of the employer sponsoring the pension pot when deciding whether to approve of delays to deficit contributions.
The guidance is part of a wider range of measures designed to offer struggling companies more flexibility and safeguard retirement savings.
"The current scheme funding regime is flexible enough to cope with the impact of a severe economic downturn," David Fairs, executive director of policy at TPR, said.
The watchdog said trustees should still report the failure of employers to meet contributions. "But we do not intend to use our regulatory powers in respect of either late reporting or failure to make contributions over the next three months," it added.
Pensions consultancy Hymans Robertson said trustees faced difficult decisions and should be cautious about agreeing to a suspension on contributions.
"Suspending pension contributions may be in members' best interests if it results in a strong and health sponsor once we emerge from the ravages of COVID-19," Susan McIlvogue, head of DB Pensions at Hymans Robertson, said.
"However, in some cases, suspending contributions will not be enough to save the sponsor and could ultimately result in members receiving lower benefits," she added.
The guidance also included giving defined benefit pension schemes the ability to put a hold on people transferring out their savings for three months, in order to protect members from market volatility and scams.
Fairs said the regulator was also considering what additional steps it could take to ensure protection of savings, "recognizing the challenging situation some scheme sponsors are in."
Insurer Aegon said it had received communication from TPR to say that trustees were required to report to the regulator non-payment of employer contributions with 150 days now, rather than the 90 days prior to the crisis.
TPR did not immediately respond to a request for confirmation.
--Editing by Alyssa Miller.
For a reprint of this article, please contact reprints@law360.com.
