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Pensions and COVID-19 - Revised guidance and regulatory easements

On 27 March 2020 the Pensions Regulator (TPR) issued new, practical guidance to employers and trustees on the challenges faced by the COVID-19 pandemic. TPR recognises the major impact this is having on businesses and pension schemes globally and has announced a number of time-limited regulatory easements to give greater flexibility in a number of areas.

The key points and urgent actions for employers and trustees are set out below.

Scheme funding

Deficit repair contributions (DRCs)

Trustees “should be open to employer requests” to reduce or suspend DRCs, but only for a short period of up to three months. Requests for longer suspensions/ reductions may be agreed by trustees but only if supported by a detailed employer proposal. 


Where DRCs are suspended, TPR expects trustees to ensure that dividends or other shareholder returns should also cease, backed by legally enforceable agreements. Note the recent announcement by the banks to suspend dividends.

Future service contributions

Requests to suspend or reduce future service contributions, for the employers and possibly members, should be treated in the same manner as requests to suspend or reduce DRCs. However, employers and trustees need to consider whether their scheme rules, contractual requirements and/or automatic enrolment legislation permit this. Consultation requirements may also apply. Legal advice is recommended.

Scheme valuations

For scheme valuations currently in progress, there is no need to revisit assumptions. Trustees are not required to take into account ‘post valuation experience’, but they do need to focus on whether provisionally agreed DRCs are still affordable for the employer. If necessary, the submission of the valuation may be delayed for up to three months (no enforcement action will be taken by TPR during this period). 


Cash flow requirements

Trustees need to review their scheme’s cash flow requirements and how they expect those obligations to be met, taking into account potentially lower contributions coming in, lower investment returns and increased member activity. 

Review and manage risk

It is essential for trustees to review and manage specific risks which may now exist within their portfolios or within their sponsoring employer’s business.


Trustees must review their investment governance structures and delegations to ensure they can continue to function and make decisions in the event of trustee incapacity or absence.

Transfer Values

Pension scams

Trustees need to be on heightened alert for potential scams and pension liberation activity as members are targeted by scammers and unscrupulous financial advisers. 

Cash equivalent transfer value (CETV)

Flexibility granted to suspend CETV cash quotations for up to three months and payments to give trustees time to review CETV terms and/or to assess the administrative impact of any increase in demand for CETV quotes.

CETV suspensions beyond three months may be possible but reasons for doing so must first be reported to TPR.

Urgent actions for trustees and employers to take now

  • Read the guidance issued on COVID-19 on the TPR website.
  • Take appropriate legal, actuarial and investment advice to consider the impact of your scheme’s specific circumstances.
  • Convene emergency trustee/board meetings to assess impact on your pension scheme arrangements.
  • Put contingency plans in place to deal with unexpected absences of key individuals.
  • Confirm with all third party providers and advisers that they have the resources, capacity and contingency plans in place to deliver essential services to the business/scheme.
  • Determine whether revisions are required to any scheme valuations in progress and/or whether to extend the process for a further three months.
  • Decide whether revisions are required to transfer value policies and arrangements.
  • Consider whether communications/consultations with members/employees are required.

TLT comment

TPR approach to enforcement

The revised guidance provides welcome clarity from TPR on its approach to regulatory enforcement in a number of key areas. Perhaps of most interest is clear steer given by TPR to trustees to be open to short-term suspensions of DRCs for a period of up to three months. Many employers will be keen to utilise resources elsewhere during this turbulent period, where cash flows are under extreme pressure. However, TPR is clear that longer-term suspensions will need to be supported by detailed proposals and trustees are expected to scrutinise those proposals rigorously.

Automatic enrolment obligations?

Clarity is required on employers’ automatic enrolment obligations in the short to medium term. The obligations remain in full force, meaning employers and employees must continue to make contributions at the statutory minimum levels (or more, as required by the scheme rules and/or contractual commitments). Whilst TPR cannot waive statutory obligations, a pragmatic alternative could be for TPR to confirm that it would not take regulatory action to enforce automatic enrolment obligations for a limited time period. This would be consistent with TPR’s approach elsewhere in the guidance (such as in respect of late valuation submissions or the deferral of pre-agreed contributions).

Governance is key

It is important to note that whilst the guidance is intended to help employers and trustees deal with the unprecedented issues caused by the COVID-19 outbreak in the short to medium term, it does not represent a long-term departure from TPR’s clearly stated policies and expected levels of governance. In particular, the guidance is clear that it does not supersede trustees’ fiduciary duties and their obligations under their scheme rules and legislation.  The guidance does not authorise, encourage or compel any specific course of action, rather it highlights TPR’s views on good practice and its current response to legislative breaches or trustee actions.

Legal advice

TPR is clear that the guidance is not a ‘one size fits all approach’ and that legal advice is required. Should you have any queries, please get in touch with the TLT Pensions Team. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2020. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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