DLA Piper has urged trustees to take action in the face of the COVID-19 pandemic, outlining 11 areas of concern that trustees and sponsors should pay particular attention to.

In a note directed to pension scheme trustees and sponsoring employers, the firm has emphasised the need to take action early, predicting a general slow down and capacity crunch in a number of areas, such as administration.

The firm placed a particular focus on prioritising cash equivalent transfer value (CETV) requests, clarifying that the three-month guarantee period is “a hard legislative deadline”, with trustees who fail to meet this timing exposed to a maladministration claim.

It also suggested trustees consider any insurance policies in place, emphasising that any exclusions for pandemics, or similar force majeure clauses, that limit the insurers obligation to pay out, could leave employers “self-insuring” benefits.

Recent guidance from The Pensions Regulator has also outlined expectations for trustees and administrators, emphasising that employers will be expected to continue to pay contributions throughout the outbreak.

In the case of employers seeking to deviate from an agreed contributions schedule however, DLA Piper has stated that trustees must “focus on what is in the best interests of the pension scheme”, adding though, that this would include allowance for maintenance of an ongoing sponsor.

It added: “If contributions are suspended, trustees will have to make sure that the pension scheme’s cashflows are reviewed to ensure that there is adequate cash for pensions to be paid, and expenses met in the usual way.”

The firm also acknowledged that “current market turmoil” could see trustees and employers agreeing that it is inappropriate time to set the effective date of an actuarial valuation, urging trustees and sponsors to engage with their scheme actuary to review their options.

This echoes calls from Aon, who earlier this week warned that difficult valuation negotiations could lie ahead for many schemes.

In addition to pointing to TPR’s guidance for trustees with a sponsor in distress, DLA Piper also urged trustees to consider whether an “out of cycle” could be appropriate, and whether current circumstances would “disproportionately” affect a covenant review.

The note has also included guidance on reviewing triggers, which was noticeably absent from TPR's guidance, with PwC pensions partner Paul Kitson emphasising the need for greater certainty.

This follows the news that the University Superannuation Scheme had reported itself to TPR after a funding measure breach earlier this month.

It also emphasised the need to consider whether a review of investment strategy could be appropriate and urged trustees to leave ample time to put in place, or re-certify a PPF-compliant contingent asset.

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