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COVID-19: an update on reporting duties and enforcement activity

As someone involved in running an occupational pension scheme you may need to report certain information to us, including where the trustees are in breach of certain obligations imposed on them. We have decided that we can adopt a more flexible approach to what we expect you to report in a number of areas due to the COVID-19 situation, and when enforcement action would be appropriate under the current circumstances.

These easements will remain until 30 June 2020, but we will review whether more specific flexibilities or restrictions are required during the following weeks - and whether the date should be extended. We would also like to reassure you that we will take a reasonable, pragmatic and proportionate approach to our regulatory work during this time.

The Pensions Ombudsman has confirmed it will take into account our latest guidance on COVID-19 issues if it receives complaints about delays caused by COVID-19 circumstances. Read The Pensions Ombudsman statement on COVID-19.

Published: 9 April 2020

Schemes in relationship-managed supervision

Many relationship-managed schemes will have already spoken with their named supervisor. In light of the current exceptional events, we are refocusing our relationship-managed supervisory activity, focusing more on near-term risks rather than the standard activities in our supervisory cycle. We will be speaking to relationship-managed schemes to better understand their position and the risks and issues that have arisen.

If you have immediate concerns due to the current situation, please contact your named supervisor to discuss.

Other schemes

We will continue to take a risk-based approach in our regulatory activity, reviewing and assessing incoming requests against a range of risk indicators.

Please contact us via customersupport@tpr.gov.uk if you require assistance. Given the current circumstances, please use email rather than write by post, if at all possible.

Our approach and the easements we’re applying

Our general approach to a number of administrative and governance requirements will be based on the following guiding principles.

Reporting

If the breach will be rectified within a short timeframe (not more than three months) and it does not have a negative impact on savers, there is no need to report to us – but you should keep records of any decisions made and actions taken.

Enforcement

In making decisions about whether to take regulatory action in respect of breaches of administrative and compliance requirements, we will do so on a case-by-case basis and adopt a flexible approach - ie granting longer periods to comply and taking COVID-19 into account.

This guidance should be read alongside the other guidance published on our website.

Areas not covered by the guiding principles

We set out below some areas where we will not be using the above guiding principles, or where we think it would be useful for us to provide more detail on our approach.

Please note this list is not exhaustive, and we will review and amend it as necessary as the situation evolves.

We will apply the overarching approach on breaches to issue an annual benefit statement – they must be rectified within a short timeframe (not more than three months) and do not have a negative impact on savers. We may consider taking enforcement action if failures are not clearly attributable to the COVID-19 situation.

Because the legislation on preparing a chair's statement does not give us any discretion in relation to enforcement, we will continue to impose fines if schemes don't comply with this requirement.

However, to ease the burden for schemes, we will not issue penalty notices before 30 June 2020. This is the case whether a statement hasn't been completed, or if it is not compliant.

We will not be reviewing any chair's statements we receive, for example through master trust submissions or via annual reports and accounts, before 30 June 2020. Any such statements will be returned unread, and not reviewed. This should not be taken as any indication that the statement in question complies with the requirements.

A cap on charges applies to certain deductions from member funds (including investment management fees, payments to providers of professional services, costs of member communication services and administrative costs.

If the cap is exceeded because costs increase temporarily due to COVID-19, you should report this unless it is not a material breach. We will take a proportionate response to enforcement, where the trustees take all reasonable steps to bring charges back within the charges cap as swiftly as possible.


You should give greater attention to the heightened risk of members being targeted by scammers and unscrupulous financial advisers. Read how to avoid pension scams.

As stated in our guidance to trustees of DB schemes, we think that it is possible that trustees of DB schemes may decide to suspend cash equivalent transfer value (CETV) quotations and payments to give themselves time to review CETV terms and/or to assess the administrative impact of any increase in demand for CETV quotes.

This approach extends to implementation of requests for payments of transfers which were made before the impact of COVID-19, although we urge you to consider carefully whether these do pose the same risk or whether they should be treated separately.

You will need to determine how to communicate your approach to members and how to deal with requests for quotes and payments that are currently being processed. You may be able to continue to provide transfers as normal.

You may also need to read guidance on transfers from DC and hybrid schemes.

Because breaches of the employer related investment (ERI) restrictions can impact members’ benefits, and as the legislation envisages criminal sanctions for certain breaches, we are not extending any reporting changes to this.

If you have been unable to complete a review of the scheme’s statement of investment principles, or a statement in relation to any default arrangement for COVID-19-related reasons, we do not anticipate taking regulatory action if the review is not delayed beyond 30 June 2020.

Failing to produce audited accounts need only be reported where the breach is likely to be of material significance. In most instances, failure to complete a set of accounts is unlikely to be of significant detriment to members and so the general extension until 30 June 2020 will apply.

Master trusts are required to file accounts with us and this remains the case, but we will not take regulatory action if the delay in filing does not go beyond 30 June 2020.

Given the need for us to be aware of significant risks to the large number of savers covered by master trusts, we will require notifications to continue for all triggering events and significant events in accordance with the legislation.

However, we will accept informal reporting to the supervisor in the first instance rather than the existing formal mechanisms. A formal report should nevertheless be made as soon as reasonably practicable.

Because notifiable events are potential indicators of serious issues that affect savers, we may need to investigate with a view to taking regulatory action, so we are not extending any reporting changes to this requirement.

We have explained in our funding guidance to trustees of DB schemes that we will not take regulatory action if a valuation submission is not delayed by more than three months after the 15 month statutory deadline. We will not expect a failure to agree to be reported if the delay does not exceed three months.

If a valuation cannot be submitted in the extended timeframe, you should explain the delay to us, and provide an outline of the remaining issues and when they’ll be resolved.