The number of employers that are requesting deficit recovery contribution (DRC) suspensions or reductions will continue to rise, according to The Pensions Regulator (TPR).

In a meeting with the Work and Pensions Select Committee (WPC), TPR executive director of regulatory policy, analysis and advice, David Fairs, said that the proportion of employers with deficit recovery plans in place requesting deferrals or reductions “may have just crept over 10 per cent”.

“Intelligence says to us that about 5 to 10 per cent of trustees have received an application from an employer to reduce or suspend contributions,” he stated.

“As lockdown continues, we expect that percentage to increase. Some intelligence is emerging that it may just have crept over 10 per cent and be heading towards 10 to 15 per cent.”

Fairs also told MPs that TPR had received around 60 notifications of employers that are renegotiating their recovery plans with trustees.

WPC chair, Stephen Timms, queried whether the regulator has seen much “falling away” of auto-enrolment contributions during the coronavirus crisis.

TPR chief executive, Charles Counsell, responded that although it was “early days”, it had not seen evidence of a reduction in auto-enrolment contributions and that it had not seen many problems with the contributions being made.

Furthermore, Counsell noted that there had not been a “major uptick” in scheme opt-outs, but that “one scheme provider” had seen a small increase.

He added that the regulator had had very few approaches from struggling employers but noted that they had been advised to contact their provider first if they were facing difficulties.

Counsell warned that, although TPR had put easements in place and was being more flexible in the use of its powers, if it sees serious failures it would still be using enforcement activity.

When questioned on whether TPR was keeping to its mantra of being ‘clearer, quicker, tougher’, Fairs stated: “I would argue that we are still being clearer, quicker and tougher.

“We were quick to respond to the challenging market conditions. We recognise that the long-term best interest of a pension scheme is to have a profitable and sustainable employer. To the extent that the pension scheme can help the employer through the short-term difficulty, we think it is right to do so.”

Share Story: