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Law360, London (December 18, 2020, 2:29 PM GMT) -- Pension schemes have asked U.K. regulators to continue offering flexibility for late pension contributions beyond early 2021 to help them cope with the fallout from the COVID-19 crisis, a trade body has said.
The Pensions and Lifetime Savings Association said that pension funds want The Pensions Regulator to extend relaxation and flexibility on contributions amid the COVID-19 crisis.
"It is important that policymakers and regulators take into consideration the forthcoming difficult economic and investment environment, and make sure that the decisions they take next year support schemes in helping savers achieve a better income in retirement," Nigel Peaple, director of policy and research at PLSA, said on Thursday.
Three-fifths of the 55 pension schemes surveyed in a poll run from Nov. 20 to Dec. 7 by the PLSA said they support the call for an extension of regulatory easing and flexibility beyond early 2021.
The pensions watchdog plans to revert to pre-pandemic rules in January after allowing flexibility to employers and funds amid the crisis.
But the survey also found that most pension funds have managed to weather the COVID-19 storm fairly well. Some 81% of the funds surveyed said they believe COVID-19 is having only little or no impact on the day-to-day running of their scheme. That figure is up from 67% in April and 42% in March.
Nine out of 10 schemes told the PLSA they are currently operating all business processes smoothly to suit the current environment. Only 8% of schemes said they have seen a substantial increase in queries from members since the start of the crisis, while the same proportion have seen a slight fall, the PLSA found.
The majority of pension funds said they feel optimistic about continuing to be able to manage the COVID-19 crisis.
"The pension industry has proven to be extremely robust in dealing with the massive disruption and unpredictability of COVID-19 and it's pleasing to see so many of our members coping well and looking optimistically towards 2021," Peaple said.
The pensions regulator introduced several temporary "easements" at the start of the pandemic, including allowing companies to suspend for three months "repair" contribution payments to deficits in their pension plans.
The U.K.'s rules on automatic enrollment oblige companies to contribute at least 3% of their employees' earnings to workplace pension plans. Trustees of the schemes are expected to report to the regulator within 90 days if an employer misses those contributions.
TPR extended that reporting deadline to 150 days at the start of the coronavirus outbreak, although it did not waive the requirement for companies to make contributions. The temporary breaks, however, were rolled back in early September.
The regulator also warned employers in November that it will crack down on companies failing to make contributions to staff pension funds during the COVID-19 crisis, reversing an earlier soft-touch approach when the pandemic first hit.
--Additional reporting by Martin Croucher. Editing by Alyssa Miller.
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