Good risk management is a key characteristic of a well-run pension scheme, and an important part of a trustee’s role.
As The Pensions Regulator makes clear, running a pension scheme can be complex and challenging, and this is particularly true during unsettling times. It's important that as a trustee, you understand the sorts of challenges you’ll face when, for example, your offices are closed or there’s an increased risk of your employer going bust.
Our guidance, contingency planning for employer insolvency, can help you to be prepared.
Are you prepared?
In our experience many schemes are under-prepared and things often go wrong. This can lead to scheme members being left uncertain of what's happening, at precisely the time they're most likely to need reassurance that their pension is safe. Carrying out contingency planning can help reduce this risk.
“The guidance we’ve published today gives information about the simple but effective steps we recommend trustees put in place to mitigate some of the risks resulting from employer distress, particularly those areas which affect members and risk delaying completion of our assessment period," says Sue Rivas, our Director of Scheme Services. "We know that running a pension scheme is challenging, and as this guidance makes clear, we're here to help.”
What other trustees say
Trustees who've been through our assessment period agree that contingency planning is essential. A trustee of a scheme that came to us in 2018 told us:
“Working with the PPF we were able to set up a contingent payroll with a panel provider to ensure pensions would always be paid, irrespective of what happened to the company.”
“As a result of the planning we did in advance, all members received a written letter from the trustees explaining the impact of the administration on their position, and pension entitlements, the day after administrators were appointed.”
Working with the The Pensions Regulator
We've worked closely with The Pensions Regulator (TPR) to put together this guidance and when updating your contingency guidance it should be read in conjunction with its guidance which you can find on TPR’s website.
"This new guidance for trustees highlights the need for trustees to maintain the high standards of governance and administration we expect, even during unexpected situations such as employer insolvency or a loss of infrastructure," says David Fairs, Executive Director of Policy at The Pensions Regulator. "Adequate risk management is vital so trustees should read this guidance, and ours, and update their contingency plans.”
Find out more:
- Download the contingency planning for employer insolvency guide
- Read more about your responsibilities as a scheme trustee