Coronavirus – what should trustees be thinking about?

26th March, 2020

  • There has been a lot written in the press and commentary from our advisers about the falls in equity markets around the world and the impact this will have had on the funding positions of our schemes. Similarly, we have seen the impact of the current coronavirus pandemic on employers, the ability for them to run their businesses and therefore the employer covenant. All of these factors will impact the future security of defined benefit pension schemes and, depending on where the scheme is in its journey, could have material consequences for the long-term viability of the scheme. Whilst these are key issues that trustees are facing, in this blog I am looking at scheme governance and how we can continue to run the scheme.


    Trustees have a duty to pay benefits to our members. Therefore, we must be confident that even in these difficult times, pensions and other benefits will be paid on time.  This is particularly key as our pensioners are likely to be some of the most vulnerable members of our society. Another key process is the payment of death benefits. This is an extremely sensitive time for the member’s family, so these benefits need to be dealt with in a timely and efficient manner. Our members will also expect transfer values to be paid and for new retirements to be processed.

    For those firms administering our pension schemes, the current period of uncertainty brings new challenges and stretches the business continuity plans of all organisations. Administration firms will have to deal with the majority of their staff home working and ensure they have coverage if key members of staff fall ill. So, ask your administrator what processes they have in place to pay members’ benefits and how they are keeping member data secure whilst staff are working remotely.

    As a firm of professional trustees, we get to see the business continuity plans from a wide range of administrators. We are, therefore, able to analyse the answers provided by the administrators and ask further questions as required. For lay trustees it might be harder, but looking at the business continuity plan of your sponsor and other advisers will provide some form of comparison. I would also recommend asking for confirmation once the payroll is run to ensure that it goes ahead without a glitch.

    Once the immediate concern of the next payroll is alleviated, you will then need to look at wider administration processes. The current coronavirus situation will keep much of the UK on lockdown for many weeks, so you will also need to ask about the April pension increase exercise. Many pensioners will expect to receive written confirmation of their new pension and P60s for the tax year. Are there any other bulk exercises coming up, such as a valuation extract or the trustee report and accounts that you need to plan for? You also need to consider how you are going to communicate with your members. Most members still use traditional methods of communication, which means physical correspondence to and from administrators by post. How will the administrators deal with member queries?

    We can expect an increase the use of secure member portals in the future where requests and responses can be made to members without having to use paper communication.


    Many schemes are in the position where they have to disinvest on a monthly basis to meet pensioner payroll and other benefits. Historically, disinvestment forms have required signatures either from named individuals at the administrator or from the trustees. We need to make sure we can continue to make disinvestments where signatories are working remotely.

    Trustees need to understand what concessions investment managers will make regarding signatures and test your process so that you know that disinvestment can be made. You may also want to consider holding more cash than normal so that you have sufficient funds to pay several months of pension payments. We can be somewhat thankful that technology has moved quickly so that we can all work remotely.

    Other Advisers

    Then there is the role of other advisers, the Scheme Actuary and Auditor. You will need to understand whether they will each be able to provide their services remotely and in a timely manner. For example, schemes have until 30 April to submit deficit reduction certificates which may reduce PPF levies, something that sponsors are likely to be exceedingly thankful for. Can these be certified in time?

    Action for Trustees

    Once we have the comfort that all our advisers are able to continue to provide their services, we need to look to ourselves. What about our business continuity plans? Do all trustees have the ability to work remotely and to participate in conference calls? Does our documentation allow meetings to be held remotely?  Now might be the time to review signing policies and decision-making processes to ensure that we can continue running the scheme even if some of our number are unavailable due to illness.

    Our members rely on us to make sure their benefits are safe and paid on time.  Despite the current difficult situation we must be confident that we can continue to take care of our members.

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    • Published byJudith Fish

      Judith is a qualified actuary with over 20 years post qualification experience She is an Accredited Professional Trustee, based in the London office, who works on a range of different schemes. She believes that good governance and collaborative working results in...

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