The role of a Trustee is a complex position and to perform this effectively you need a multitude of skill sets and the knowledge of trust law, pension legislation and good practice.
Throw in a pandemic and the responsibilities increase further!
At the outset of all this the focus was on the day to day routine.
The Regulator issued guidance on the key risks to pension savers that Trustees should focus on, these were:
Benefits need to be paid.
The risk of scams needs to be minimised.
Employers need to continue contributing.
Savers need support to make good decisions in these challenging circumstances
The Regulator acknowledged that some administrative breaches of the law may occur, and they confirmed that they would maintain a proportionate and fair approach to any action they might take.
The main issues surrounding these areas of focus were the practicalities of teams working at home, the possibility of staff going off sick and the maintenance of confidentiality of information and IT Security.
Many adapted quickly and risk assessments were put in place to identify areas to focus on.
Moving on 5 months… and the UK officially now in recession, the ongoing challenge remains the strength of the employer covenant.
In terms of accounting, it is important to understand that a scheme is considered a going concern unless the trustees have taken the formal decision to wind up, or a notice has been served to wind up the scheme, or a trigger event has occurred which indicates that there is no alternative to wind up. A trigger event would include contributions having stopped or the employer has experienced an insolvency event.
If there are material uncertainties, these do need to be disclosed in the accounts too. Uncertainties include:
The scheme has entered the PPF assessment period; and
The employer experiencing financial difficulties and contributions are consistently late.
It is vital that the Trustees understand the impact the pandemic has had on the sponsoring employer to understand how this will impact their scheme in the long term.
The Regulator has issued helpful guidance for Trustees, to deal with some difficult questions that might be posed by the employer and provides a checklist of questions to ask of them.
In addition, our specialist pension team are on hand to offer any advice and assistance you might need with the accounting disclosures. They also have the commercial skills to offer advice on answers to questions that have been raised with the sponsor employer.