TPR executive director of frontline regulation Nicola Parish
The Pensions Regulator (TPR) has urged trustees who may be concerned their sponsoring employer is struggling or who are involved in discussions about a restructuring plan to engage with the regulator “promptly”.
In a blog today (8 March), TPR executive director of frontline regulation Nicola Parish urged trustees to involve the regulator at an early stage "when it becomes clear that trading for a sponsoring employer is challenged, when the viability of a company is uncertain or if there are issues or defaults with other financial creditors".
This follows the completion of the £850m buy-in deal between the two Arcadia Group pension schemes and Aviva, which secured the benefits for 8,800 members of the schemes after they entered into a Pension Protection Fund (PPF) assessment in November 2020.
Parish said the deal "is of course a positive result for those who not only lost their jobs when the Arcadia group collapsed into administration in 2020, but also faced uncertainty about their pensions".
"The deal is also a strong reminder of what can be achieved when trustees of defined benefit schemes, whose sponsoring employer is struggling, engage with TPR, the PPF and other key stakeholders, at an early stage."
She noted the regulator's job is not only to use its powers when things go wrong. "While trustees are the first line of defence for savers, through an open dialogue with them, their advisers and company boards, we are skilled at supporting trustees where necessary to negotiate the right security and other protections for pension savers when companies are struggling."
Parish also emphasised the importance of scheme trustees having the right skills to deal with a distressed situation and have access to expert advisers.
When a sponsor is challenged, Parish she said trustees should also consider the importance of having a "comprehensive financial information-sharing package that includes detailed forward-looking forecasts and how these may vary, which is assessed regularly by appropriate qualifies independent covenant advisers, with costs borne by the sponsoring employer".
She added: "The message is simple: the sooner we are involved, the more benefit we can bring to achieving robust settlements with other creditors, and ensure the best outcome for savers is achieved."
