ITS team comments on TPR guidance for protecting schemes from employer distress

NOVEMBER 2020

New guidance for trustees on protecting their schemes from employer distress stresses the need for robust protections and integrated risk management, with the Pensions Regulator warning it could not always intercede in cases and that trustees must ensure their systems are robust.

The guidance also highlighted the importance of integrated risk management as key to trustees’ success – especially when navigating the pandemic-related uncertainty – with workable contingency plans and suitable triggers vital if trustees are to spot and react early to problems with their sponsors.

Pensions Expert wrote an excellent piece on this topic – available for any of their members to read – and asked several ITS staff for their thoughts on the new guidance.

Nita Tinn, who also chairs the Association of Professional Pension Trustees (APPT), told Pensions Expert that the APPT welcomed the new guidance, “which provides important and practical recommendations to help trustees of DB schemes identify and effectively plan for sponsor distress”.

She added: “In the current economic environment, it is more important than ever that trustees are prepared for the possibility of a sponsor experiencing financial stress and can take mitigating steps as early as possible to protect members.

“Having a plan in place and the tools needed to consider everything from risk management and scheme governance to member communications will be crucial.”

Fellow ITS directors Akash Rooprai and Helen Frisby concurred, telling Pensions Expert that ensuring trustees have the right skills, experience and education to handle a wide range of possible scenarios, in particular insolvency scenarios, is of vital importance to scheme prospects.

In their statement they added: “It is imperative for trustees to be fully conversant in this very complex area. Security changes, corporate activity and refinancing can happen very quickly, so trustees need to be on the front foot.

“Experienced advisers and professional trustees with this experience and expertise are invaluable. Both can provide guidance, training, coaching and comfort to other trustees with less experience in these areas.”

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