More than one in 10 (11 per cent) employers seeking easements on pension contributions have asked for a reduction, while 89 per cent asked for a suspension, new research from Mercer has found.

The research showed that 15 per cent had requested a suspension of all contributions, 67 per cent requested to suspend deficit reduction contributions (DRCs) only, and 15 per cent asked to suspend both DRCs and expenses.

Trustees have agreed to 44 per cent of the requests, with many requesting further information or legal advice before deciding, and just 7 per cent rejecting the request completely.

However, this fell to a 20 per cent acceptance rate when companies asked for greater than three months relief of payment.

The research found that a suspension of three months was the most common period of time requested, although durations ranged from three months to over a year.

It also revealed that only one client had offered a security as part of the discussion around reducing or suspending cash contributions.

Mercer also stated that while clients across all sectors had been affected, requests among the retail sector had been the most common.

Commenting on the findings, Mercer chief actuary, Charles Cowling, said: “It is a positive step that trustees and companies are working together to mitigate the short term challenges of Covid-19.

“The focus for both trustees and companies is to ensuring members receive the full benefit promise over the lifetime of their retirement and support the company during this difficult period.“

Mercer's findings follow estimations from Lane Clark and Peacock that £0.5bn of contributions will be deferred, while The Pensions Regulator recently stated that between 5 and 10 per cent of sponsoring employers were requesting DRC suspensions.

Share Story: