Pension providers must be prepared for a drop in de-risking transactions and other projects amid the coronavirus crisis, according to a report from Altus.

The company warned that the number of scheme tenders for replacement group life policies or pensions, and for new scheme de-risking transactions, would fall as sponsors are forced to concentrate on survival and assessing their situation.

The report advises that providers seek to work with advanced defined benefit (DB) de-risking prospect clients in order to identify whether proceeding with any transaction would be advantageous.

The short-term pricing of bulk buyouts and buy-ins were seen to improve, though higher capital needs were expected to increase pricing for deferred pensions.

Implementation projects and transfers are likely to be put on hold, according to the report, as resourcing issues demand that focus is placed on other business areas.

Altus recommended that providers focus on the core activities identified in The Pensions Regulator’s Covid-19 guidance, including paying benefits, minimising the risk of scams and collecting employer contributions, as well as reporting to trustees and regulators as normal.

The report also highlighted the fact that some sponsors are likely to encounter financial difficulties, cautioning that volumes of late payments will increase and pointing out that some companies might cut contributions to mandatory minimums if they have furloughed staff.

Earlier this week, Mercer research found that 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.

Altus stressed that providers will need to adjust their systems and processes to extend their reporting period for late employer payments to 150 days, while also remaining in contact with scheme sponsors in order to remind them of their duties.

Contact must also be maintained with trustees who want to understand the impact of volatility on their funding positions, while the report advocated assuring both trustees and corporate customers of the resilience of the organisation, and the effectiveness of business continuity arrangements.

The report stated: “On a positive note, financial services has proven itself as an essential service. From everyday banking and lending, through to protection insurance to help people through these tough times, the sector has proven remarkably resilient in the face of the challenges of coronavirus.

“Even the largest organisations have found they can mobilise quickly to prioritse the wellbeing of their customers and give them the best possible service.”

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