Vishal Makkar, Head of Retirement Consulting at Buck in the UK comments on the possible pension payment holidays during the coronavirus outbreak: “We are living in truly exceptional times with the Government trying to prevent both a health and economic crisis. With the Chancellor announcing a number of new measures to financially help businesses and individuals, it is perhaps not an unreasonable request from some companies to ask for a temporary reduction in deficit reduction contributions to support them in these difficult times.
“The reality is that despite Government intervention some businesses may not survive the next few months, including pension scheme sponsors who are currently considered to have strong covenants. The funding regime is designed to be flexible and, in some cases, particularly where companies provide clear justification and contingency support to trustees, a temporary suspension of contributions may give some companies enough breathing space to stay afloat so that they can start trading again as normal later in the year, meaning any missed contributions could ultimately be made good.
“It is vital that companies and trustees work together to secure an outcome that maximises the security of member benefits and ensures the sustainability of employers who may be under pressure in the coming months. At the same time, Trustees must ensure that they are in a position to address any member queries about their benefits and ensure pension payments continue to be paid in full and on time.”
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