99 problems and is the pension scheme one?
4th May, 2020
I’m wondering whether the above title might be a little too much given the seriousness of what is going on. But …. I’ll go with it.
The finance team of every business is under a huge amount of pressure. There has often been mass furloughing, leaving a skeleton staff to figure out how to balance a cashflow with very little going in and the majority of the usual overheads flying out.
Trusteeship is generally about collaboration. The vast majority of sponsors want the same as we do i.e. for the promise to all members to be met. We may disagree slightly on how much money we should need to achieve this but we are aligned on concept. The only way to achieve this is by having a sponsor who remains with you for the whole journey.
With this in mind we reached out to all our sponsors early in COVID-19 planning. We had a preliminary round of calls pre-lockdown to understand contingency planning. When lockdown came we then looked to talk cashflow, making it clear to challenged employers that the pension scheme would consider support if there was equitable treatment i.e. the pain shared by shareholders, suppliers etc. We raised the Regulator guidance proactively. We were not promoting it but simply making sure sponsors understood the options available. If a sponsor were to fold without knowing the scheme could support in some way (which may have bought extra weeks) that would seem completely unacceptable to me. It would also not be in the interests of the members to whom I am accountable.
We continue to speak regularly to our sponsors and to manage requests for support as they arrive. The key point of this blog is to note that the pension scheme can be part of the solution, not just one of the 99 problems. If the scheme sits on the “not priority” list, then you may be missing something. This highlights the importance of having an engaged trustee board working proactively with you. In these situations, I can appreciate people cannot see the wood for the trees.
We are offering free training to Trustee Boards, who do not currently have independent trustees, to explain their options and what they should be considering. We hope in this way that we can help to support the wider eco-system during this challenging time.