Legal briefing | Pensions |

COVID-19: Checklist for pension scheme trustees


The COVID-19/Coronavirus outbreak has made many aspects of our lives more difficult but pension scheme members are relying on scheme administration continuing as normal, so far as possible.

Here, we set out a checklist for pension scheme trustees of key matters they should be considering.  There may of course be additional matters to be considered in specific scheme circumstances.

Following an initial short statement on what pension schemes need to consider (which is no longer on its website), the Pensions Regulator has issued a longer update for trustees, employers and administrators. Our checklist below is broader but incorporates key messages from this.

Please see for more on how we are helping our clients to respond, including a message from our leadership team about our business continuity arrangements.


  • Processes: Speak to your administrators to ensure that they are able to operate their business continuity plan and that all processes will be carrying on as normal. This includes the payment of pensions and other benefits, processing and prompt investment of contributions, fast DC fund switches and transfer value payments (to avoid claims for losses caused by delays), and processing retirements. Are the administrators able to continue operations fully remotely or are there limitations?  Are they able adequately to cover staff on sick leave?

    If there are under-resourcing issues, agree which activities should be prioritised – the Pensions Regulator suggests that these might be paying benefits, processing retirements and paying death benefits. The Regulator also tells trustees and administrators to report to the Regulator immediately if they believe they will be unable to pay members' benefits.

  • Advisers and other service providers: Check that your various advisers and other service providers have a business continuity plan and will be able to follow it. Ask them to tell you immediately if anything changes.

  • 'Force majeure' clauses: Where they are triggered, these clauses can allow an administrator or other service provider to cease providing services or to avoid service level requirements. If such a clause might apply in the current circumstances, consider the issues and what you would do if the provider seeks to rely on it.

  • Contribution changes: You should understand what effect any changes to working arrangements will have on pay and contributions – eg, self-isolation, premises shutdowns or enforced leave, and the government's job retention scheme.

  • Business continuity plan: The Pensions Regulator expects trustees to have a business continuity plan. For those that do not, it is not too late to put one in place.

Trustee arrangements

  • Decision making: Are there arrangements in place for the trustee board to communicate and meet virtually to take decisions? Does the scheme constitution have any particular requirements in this regard? If so, do they need amending to accommodate the new way of working?

  • Illness: Is the trustee board able to continue operating if individuals fall ill and are unable to participate? What arrangements are there for such circumstances? Can a deputy chair act in place of an incapacitated chair?  Do the quorum requirements need consideration? Trustee governance documents may need to be amended to reflect any changes.

  • Signing authorities: Review signing authorities to ensure that individuals with appropriate authority are available to sign legal documentation and operational instructions, including whether a facility for electronic signature (such as DocuSign) has been set up.

Member communications

  • To communicate or not?: There will not normally be any legal requirement to communicate with members but in specific circumstances you may wish to do so – for example if there are delays in any scheme processes that it has not been possible to avoid. As an alternative, consider preparing stock answers to expected questions and (if applicable) putting them on the scheme website.  Also consider warning members again about pension scams.

  • DC benefits: Members will be concerned about investment market falls and reduced fund values. If you are communicating with them, they might be pointed towards existing guidance on long-term investment, choosing funds and 'lifestyling' changes.  Or this can be prominently highlighted on any scheme website.  Be aware that some DB members may not understand that market falls do not directly affect their DB benefits.  The Money and Pensions Service website is a useful resource to which DC and DB members can be signposted.

  • DC members approaching retirement: Some DC members nearing normal pension age may wish to delay taking their benefits, in the hope that some recent investment losses can be recouped. Do the scheme rules allow this?  If not, can/should they be amended?  Members further from retirement may wish to reconsider when 'lifestyling' changes to equity fund holdings begin – the existence of the option to change this could be communicated, in neutral terms.

  • Death benefit nominations: If you are communicating with members, you might consider including a sensitive reminder about ensuring that death benefit nominations are up to date. You may, on the other hand, consider that bringing this up might only add to members' anxieties.

Investment (DB schemes)

  • Investment advice: Speak to your investment advisers and ask them about the appropriateness of the scheme's investment strategy in the current circumstances. Have weaknesses been exposed?  Have market movements created possible investment opportunities?  Does a devalued covenant (see below) mean that there should be changes to the investment strategy?  The Pensions Regulator's 2020 annual funding statement should contain useful guidance but is not going to be published until after Easter.  Remember that you need to consult the employer about a change to investment strategy.

  • Balance of investments: Have market movements resulted in a need to rebalance your investments? Consideration may need to be given to whether the trustee will be a forced seller or forced buyer at a sub-optimal time.

  • Derivatives: Has the value of collateral been reduced by market falls, resulting in a need for additional collateral to be provided? Do you have enough liquidity to be able to satisfy such a margin call?

  • Liquidity: Does the scheme need more cash than usual at the moment, for example due to delays in realising investments or to make death benefit payments (including any delays in receiving funds from insurers)?

  • Mortality: In the longer term, ask the actuary for advice on the appropriateness of the scheme's mortality assumptions.

Funding and covenant (DB schemes)

  • Increased deficit: Have market falls materially increased (or created) a scheme deficit? Is there ongoing exposure?  If so, consider reviewing the investment and funding strategies and recovery plan.  Also consider contingent asset possibilities.  In extreme situations, do transfer values need to be reduced?

  • Covenant: Has the employer (or a guarantor's) covenant been materially affected, perhaps due to its business being in a particularly affected sector? If so, seek advice from your covenant adviser or consultants.  Keep in mind that there may be long as well as short term issues. If necessary, review the investment and funding strategies and consider contingent asset possibilities, to reduce reliance on the employer covenant.

    If the employer is very financially weakened, it might be appropriate in some circumstances to allow a reduction or suspension of employer contributions. Key questions about a reduction or suspension of contributions will relate to the affordability of contributions and how other stakeholders are being asked to share the pain.  Consider whether the Pensions Regulator needs to be brought into the conversation.  The Regulator now has a web page on this topic in the current context: "Guidance for DB scheme trustees whose sponsoring employers are in corporate distress".  This includes a list of key questions to ask the employer and principles to keep in mind when considering requests to delay deficit repair contributions.

  • Contingent assets: Has there been a negative change in a guarantor's credit rating? If so, does this have any effect under the terms of a guarantee or other contingent asset?

The Pensions Regulator's announcements also remind trustees about integrated risk management.

Pension Protection Fund considerations (DB schemes)

  • Possible employer insolvency: The PPF has a publication "Contingency planning for employer insolvency: Important areas for trustees' action". Are you as ready as you could be for the possibility of the scheme sponsor undergoing an insolvency procedure and the scheme entering PPF assessment?

  • Contingent asset certification: With regard to the fast approaching 31 March contingent asset certification/recertification deadline, the PPF has announced that it will no longer accept any hard copy documentation: there are alternative arrangements for soft copy submission. Is contingency planning needed, to ensure that any necessary authorisations, communication lines with sponsors and signatories are available? Please seek legal advice about any difficulty in executing documents caused by illness or self-isolation.

COVID-19 hub

The rapid global spread of the Covid-19 virus has resulted in significant market volatility and is placing an immense strain on the business community. Get guidance and practical advice on key operational and legal issues.

COVID-19 hub