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Law360, London (April 20, 2020, 1:44 PM BST) -- Europe's pensions watchdog has told national regulators to be aware of the heightened risk of financial fraud during the COVID-19 outbreak and to be flexible with reporting requirements and employers struggling to pay contributions.
The European Insurance and Occupational Pensions Authority issued new guidance Friday telling national watchdogs how to reduce the damage done to pension pots by the coronavirus outbreak, which has killed more than 160,000 people worldwide.
The watchdog said it recognizes the "stabilizing role" that pensions funds can play as "long-term investors in the current economic climate."
The guidelines, which apply to national regulators in member states, state that funds and watchdogs should be aware of the increased risk of pensions fraud amid the global health crisis.
EIOPA said the increase in numbers of staff working remotely as well as the general disruption the crisis has caused will create a surge in cybercrime, data breaches and fraud.
Watchdogs should also encourage funds to be flexible with savers and members to help protect investments. Members of defined benefit schemes in particular should be allowed to delay making lump sum payments if they need to, the bloc's regulator said.
National regulators should also allow pension funds some flexibility when they collect contributions from employers who might be facing financial distress as a result of the outbreak. Watchdogs should also be flexible when it comes to enforcing reporting requirements on pension funds, EIOPA said.
Regulators should also keep a close eye on the liquidity positions of pension funds, as they could be hit hard by the crisis. Funds should make continuity a priority in activities such as speedy investment of savers' money during the pandemic, EIOPA said.
Britain's insurers have also warned savers to beware of the financial damage that will come with the coronavirus outbreak.
The Association of British Insurers warned retirement savers on Friday to think twice before dipping into their pensions pots during this time of financial uncertainty.
The ABI said savers can come under pressure to move their money around as fears abut the future grow, and added that scammers will take advantage of the situation to swindle people out of their retirement savings.
Britain's finance watchdog issued a similar warning earlier in April. It said that conmen will take advantage of vulnerable consumers who are worrying about how their finances will be hit by the coronavirus crisis.
The regulator warned savers to reject all unsolicited offers and should get to know the warning signs of financial fraud, including "high rates of return which sound too good to be true, so-called special offers or pressure to make a quick decision."
--Additional reporting by Martin Croucher. Editing by Ed Harris.
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