Beyond COVID-19: Meeting challenges old and new

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The past year has been a remarkable period for everyone, with challenges and difficult decisions facing people from all walks of life.  For pension scheme trustees, the challenges have been similar, but the COVID-19 pandemic has also presented the retirement industry with its own unique issues.

However, the payment of benefits and the development of regulation has not stopped. ‘Business as usual’ may have changed in some respects, but in many cases it has not.

Tackling the challenge

At Apex Pension Trustees, one of our first tasks when the government enforced the first national lockdown almost a year ago was to ensure that all pensioners in our schemes knew that their benefits would continue to be paid.  This meant a significant communication exercise, writing to members or liaising with administrators ensure the important messages got through.

Since then, many members have contacted us with further questions regarding their benefits.   We have been able to help them understand their options and provide a listening ear. This is particularly crucial when a spouse has died, and there is a need for sympathy and reassurance that benefits will be paid.

Sadly, we have also seen a rise in scams and fraud attempts aimed at pensioners and savers related to COVID-19. It is vital that trustee boards have in place effective tools to prevent their members from falling victim to such activity, including strong messaging and due diligence processes when assessing transfer requests. A close working relationship with administrators is therefore important and we work hard to maintain this

Cybersecurity is an emerging priority for schemes. As more activity is conducted online – a trend accelerated by remote working – ensuring systems are fully protected is crucial. This is not something we as trustees can simply outsource to administrators either: The Pensions Regulator (TPR) has made it clear that boards must be on top of how their scheme data is protected and ensure this protection is up to date. We have therefore developed a series of checks for all our schemes to ensure we can have confidence in the administrators.

Corporate conundrums

Companies of all sizes and descriptions have been seriously affected by the pandemic. Activity has slowed for some and collapsed for others, presenting significant revenue challenges.

We have seen plenty of guidance from TPR on its expectations regarding contribution adjustments and deferrals, including what to consider and when to report changes. It has also been vocal on how to handle pension transfers and has granted extended timelines for valuations where necessary.

In the worst cases, employer covenants have declined, which places an additional burden on trustees to understand how this affects contributions and the investment strategy. TPR has issued updated guidance on contingency planning and how to deal with distressed employers in these circumstances.

At Apex Pension Trustees, our significant experience in negotiation has proven valuable to our clients when faced with difficult financial discussions with sponsors and other stakeholders. Despite the challenges and concerns, we can help our co-trustees retain a focus on what matters most – ensuring members’ benefits are paid in full.

Business as (un)usual

While the COVID-19 pandemic created a difficult operating environment, it has not stopped other developments from affecting pension schemes and trustee boards.

Guaranteed minimum pension (GMP) equalisation remains an important issue to be addressed for many defined benefit schemes. Most recently, the UK High Court ruled that historical pension transfers going back 30 years might have to be reassessed for the impact of GMP equalisation, representing a major data challenge for schemes and administrators. We and our co-trustees need to budget for the time and resources needed to review their records and assess the GMP impact.

The Apex Pension Trustee team’s understanding of contracting out rules and GMP reconciliation issues can help  make decisions efficiently and pragmatically, ensuring the right outcome for members without getting bogged down by unnecessary delays.

New rules on climate change reporting for investment portfolios will require attention and action in the coming months and years, to ensure compliance and improve transparency of reporting.

Whether defined benefit or defined contribution, trustees need to consider the needs of their members as well as those of the Regulator. What do our members want to see their pension scheme doing to address their environmental and social concerns? As trustees we work with other service providers such as consultants and asset managers to ensure they have the necessary data and processes to produce accurate and timely reports.

Helping you rest easy

All this work presents challenges to trustees, and particularly to individuals who may have full-time jobs to work alongside their pension fund responsibilities. Remote working has been enforced relatively quickly and is not always optimal. Balancing work and home life is difficult in this environment.

It is our job as professional trustees to alleviate some of these challenges and help our co-trustees navigate round the issues efficiently and effectively. We draw on our deep and broad experience with a diverse range of schemes to understand each scheme’s unique situation, how to tackle problems, and how to harness opportunities. Our team-based approach means we have experience from all areas of pension scheme management and are always available to help make decisions and hit tight deadlines.

We are trustees of a diverse range of pension schemes with sponsoring employers from listed and private companies, to public sector organisations, statutory bodies, and charities. Our aims are to help reduce cost and time spent by companies on their pension scheme management by drawing on our comprehensive experience in all areas of trusteeship.

Whatever the challenges faced by your scheme – from funding to data, GMP reconciliation through to cybersecurity – rest assured, we have done it all before.

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