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COVID-19: A guide for trustees

Trustees across the U.K. are currently grappling with the COVID-19 (Coronavirus) pandemic and its impact on pension schemes. As the weeks progress, many unknowns still remain about the impact of the virus – and this can be unsettling for trustees and members alike.

Buck is here to help you work through your options and consider the near- and longer-term implications of your decisions.

Supporting our clients

In these challenging and unprecedented times, Buck’s two-way commitment to our clients and our people is more important than ever. As the COVID-19 situation evolves, we are reviewing and adjusting our processes and policies to ensure we minimise customer impact and service delivery disruption.

You can read more about our business continuity planning for pandemics here.

We’ve also worked hard behind the scenes to plan, test, and execute our move to a totally home-based working model, so we can continue to deliver consulting, technology and administration support without interruption. As of Monday 23rd March, our highly dedicated teams have achieved and fully implemented this. Find out more about the progress we’ve made in this infographic.

Things to think about

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Stay calm on investment decisions

With global market volatility, and investment markets experiencing considerable turmoil, it may be difficult to refrain from taking immediate action. While changes might be right in the short term, they might not be right for the long term. Or vice versa. For your plans or your members.

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Communicate with scheme members

Many pension scheme members will be worried about the volatility of the market and the corresponding value of their pensions and investments. Communicating with members to remind them of the context of long-term investments will help to mitigate the risk of members making uninformed decisions, whether they have defined benefit or defined contribution pension savings.

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Maintaining service levels for your members

Your pension administrator is the key interface with your scheme members. In order to ensure the efficient operation of member benefits, copies of business continuity plans should be obtained from your scheme administrator to check that actions are being taken to manage and mitigate any key risks to the administration service.

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Effective scheme governance in a virtual world

Lockdown, social distancing, and self-isolation – alongside associated changes in corporate policy – is leading to many of us adapting to an entirely new way of virtual working, all based around technology. Consideration needs to be given to the practical implications of this.

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Market movements and DB scheme funding

The impact of market movements on defined benefit pension schemes is mixed and depends on the proportions held of growth and liability matching assets. Where the employer covenant is strong then the trustees may be able to weather the storm, but if weak (or if affected adversely by COVID-19 effects) then trustees may look to bolster funding where possible by cash or other security. However, this may be challenging in many cases, particularly as many companies are requesting contribution holidays in the short term in line with The Pensions Regulator’s recent guidance.

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Processes involving both trustees and employers

There are a number of critical pension scheme processes that are handled by trustees and/or employers. These should be reviewed, and tested, to identify possible points of failure and mitigated where possible with alternative plans. For example, key person risk (due to sickness or furloughing) could be mitigated through agreed calling and decision trees.

We’re here to help you

If you’d like to speak to a member of the Buck team about how to deal with the impacts of COVID-19 on your pension scheme, we’d love to help.

Contact us today

Resources: actions and guidance

Checklists, updates, and guidance created to help trustees and employers manage the impacts of COVID-19 on defined benefit and defined contribution pension schemes.

Update

Impacts and actions for group life assurance

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Checklist

Employer considerations for DC pension schemes

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Checklist

Checklist for trustees and employers: Impact on pension schemes

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Resources: blogs

A range of blogs offering insight from Buck’s team of experts relating to COVID-19 and pension schemes.

Blog

UK covenant impacts of COVID-19

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Blog

A time to reflect

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Blog

Addressing the investment challenges posed by COVID-19

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Resources: FYIs

COVID-19 focused analysis on legislative and regulatory developments

FYI

Issue 27 – COVID-19: Regular updates guidance

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FYI

Issue 20 – The Pensions Regulator’s latest expectations on scheme funding

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FYI

Issue 19 – COVID-19: Pensions Regulator publishes DB transfers warning

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FYI

Issue 17 – The long goodbye to RPI? RPI reform consultation

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FYI

Issue 15 – COVID-19: Automatic enrolment and pension contributions – Regulator guidance for employers

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FYI

Issue 13 – COVID-19: Further Regulator guidance

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FYI

Issue 12 – COVID-19: New Regulator guidance

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