Coronavirus – and associated guidance

The coronavirus/COVID-19 pandemic has impacted wide-ranging areas of life and the economy. Although the impact on pension schemes has been lower than on many areas of life, there have been some developments relating directly to the pandemic:

• The government’s Coronavirus Job Retention Scheme introduced the term “furloughed workers”, for those employees who are not able to perform any work-related duties but are able to continue to receive 80% of their current salary, up to £2,500 per month, from the scheme. The scheme will continue in its current form until the end of July and from the start of August until the end of October, furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff.
  
  Within the Railways Pension Scheme, the default position for members is that they pay contributions – and accrue benefits – on normal pay if a member is furloughed. However, the Trustee has been able to accommodate some special arrangements for members who have wanted to suspend contributions due to the impact of being furloughed.

• The government’s Coronavirus Act 2020 introduced various emergency measures to support the fight against coronavirus. This included the introduction of Emergency Volunteer Leave (EVL), which was a new form of unpaid leave introduced to enable workers to support health and social services.
  
  Under the terms of the legislation, any member who takes EVL would continue in membership and accrue benefits in full within the Scheme, in a similar way to how a member is treated if they are absent on Family Leave.

• Various financial bodies, including the Financial Conduct Authority (FCA), the Money and Pensions Service (MaPS) and the Pensions Regulator (TPR), have published various items of guidance for trustees, employers and members to reflect the coronavirus/COVID-19 pandemic.

Within the guidance provided to members, there is a focus on:

• Not making decisions about pensions based on short-term events and circumstances that may have long-term consequences for an individual’s financial wellbeing and retirement;

• The importance of getting independent advice or guidance before making any decisions relating to pensions; and

• The need to ensure that individuals protect themselves from pension scams, as there has unfortunately been an increase in financial scams to coincide with the pandemic.

Consultation on scheme funding code of practice

We have previously provided some information about a new Pension Schemes Bill that is progressing through Parliament. One of the aspects of the Bill is that there are to be changes to support the Pension Regulator’s (TPR’s) plans for a new defined benefit scheme funding Code of Practice.

Although the Bill and its associated legislation is not yet in force, TPR has launched the first stage of a consultation on proposals and principles for its revised code of practice for scheme funding. The consultation will close on 2 September 2020 and the Trustee is providing a response to it as the final Code of Practice is expected to be in force by the time of the Fund’s next valuation.

One of the main focuses of TPR’s plans for its Code of Practice is to improve security of benefits within schemes, including for the many schemes in the UK that no longer have active members. As well as ensuring that benefits for these members are well protected, the Trustee is wanting to ensure that the new Code of Practice does not have an adverse impact on the provision of future benefits within open schemes, such as the Fund. Therefore, this will be one of the themes that the Trustee includes within its consultation response.