23: TPR’s reporting requirements resume from 1 July 2020
At the beginning of the pandemic, the Pensions Regulator (TPR) reduced the burden on occupational defined benefit schemes by easing reporting requirements. TPR has now issued updated guidance confirming that most of the reporting requirements which were paused will recommence from 1 July 2020, although many easements will continue to apply.
From 1 July 2020, trustees and administrators will need to resume reporting on the following key areas:
- trustees must report late actuarial valuations and recovery plans that have not been agreed within the statutory timeframe. While TPR cannot waive the requirement for actuarial valuations and recovery plans to be submitted within 15 months of the valuation date, it states that it will continue to take a reasonable approach to late submission caused by COVID-19 issues;
- if new valuations, schedules of contributions or recovery plans are agreed due to the impact of COVID-19 on employers then these must still be submitted to TPR in accordance with legislation. In connection with this, TPR believes that around 10% of schemes have agreed a temporary suspension or reduction of deficit repair contributions (DRCs) or future service payments but recognises that many scheme are in the process of discussing possible request or extensions of existing suspensions. It warns trustees that there should now be improved visibility of employers’ financial situations and not to unquestioningly extend their original suspension arrangements on a three-month rolling period. Trustees should undertake due diligence on the employer’s financial position to understand the business case for agreeing any new suspension or reduction and ensure that bonuses and shareholder dividends are not being paid unless appropriate guarantees are in place;
- delays in issuing cash equivalent transfer value (CETV) quotations and payments must now be reported. TPR has also confirmed that it expects trustees to continue to issue a template letter to all members requesting a CETV quote warning them that it may not be in their interests and to think carefully. Trustees should continue to monitor requests for concerning patterns that may indicate pension scams;
- while delays in preparing audited accounts must be reported, enforcement action will not be taken on late accounts which are signed off by 30 September 2020; and
- it is unlikely that regulatory action will be taken if a review of a statement of investment principles is not delayed beyond 30 September 2020.
Despite resuming reporting requirements, TPR has indicated that failure to comply will not automatically lead to enforcement action where breaches are related to the pandemic. This reflects TPR’s approach of seeking to respond flexibly and pragmatically to the current crisis, whilst ensuring that it has sufficient information to manage risks to savers.
Trustees should note the importance of maintaining proper records of all decisions and actions throughout this crisis to help demonstrate that reasonable steps have been taken to avoid or rectify any breaches. It is also important to note that the Pensions Ombudsman will take TPR’s guidance into account when dealing with complaints about delays related to COVID-19.
TPR’s updated guidance also recognises that trustees sometimes have to make decisions where there is no obvious right answer or guaranteed outcome, but they have to exercise their judgement as best they can. It reminds trustees that where trustees have difficult decisions to make and the decision is material for the scheme or employer, taking professional advice is the right thing to do. Our pension team is here to help.