David Fairs, Executive Director of Policy at TPR, said: “The significant measures and clear guidance we are announcing reflect the unprecedented and challenging situation trustees and employers find themselves in. The current scheme funding regime is flexible enough to cope with the impact of a severe economic downturn. However, we are actively considering what additional support and guidance we need to provide now so that those who manage and contribute to people’s savings can take the right steps to ensure adequate protection, recognising the challenging situation some scheme sponsors are in.
“We will continue take a reasonable, pragmatic and proportionate approach in the weeks and months ahead and we call on trustees to follow the guidance closely to make well balanced decisions.”
Key points from the update includes:
• We do not expect DB trustees who are close to completing their valuations to revisit their valuation assumptions.
• If trustees need more time to consider the scheme’s and employer’s situation, they may decide to delay their recovery plan submission by up to three months, and in that case we will not take regulatory action in respect of a failure to submit.
• DB Trustees should be open to requests to reduce or suspend Deficit Recovery Contributions (DRCs) in line with the principles set out in our guidance published March 20. Where sufficient information is not available to make a fully informed decision, trustees may, where appropriate, agree to a reduction or suspension of DRCs for as limited a period as possible while appropriate information is provided. This should not be longer than three months. We expect the scheme to be fairly treated compared to the other stakeholders of the employer. Employers and trustees should seek to work closely together and share relevant information.
• DB trustees may decide to suspend cash equivalent transfer value (CETV) activity for up to three months if this is in the best interests of their members.
• DC trustees should consider how individual members might react in the current environment to headline market / fund value falls or reduction/loss in earnings. Members could make inappropriate decisions, crystallise losses, or be exploited by scams.
The guidance, which can be found here, will continue to be updated in the weeks ahead.
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