Trustees should take care to put TPR guidance into context, and consider their legal obligations when deciding how to react to the COVID-19 crisis. This includes decisions relating to transfer values (CETVs).
On 27 March the TPR published its latest guidance on DB scheme funding and investment COVID-19 guidance for trustees. The guidance makes clear that it is not authorizing any particular course of action and trustees should not be blindly following it.
Many members will have seen how COVID-19 has impacted the world’s economies and will have felt panic. I am no psychologist, but it is well known that panic often leads to irrational and inadvertently risky behaviour. TPR is absolutely right that Trustees need to be aware of how scheme members, who may be targeted by scammers and unscrupulous financial advisers offering false hope may react.
To protect members trustees may decide to suspend CETV quotations and payments, even if this breaches disclosure requirements. TPR has said that “we cannot waive an obligation to report the breach to us, but we won’t take regulatory action in the next three months against trustees who suspend CETV activity”. However, Trustees must bear in mind that there may be independent rights under scheme trust deeds and rules to consider, and that there statutory processes to follow in order to avoid future claims from members.
We are not authorising, encouraging or compelling a particular course of action - we expect trustees to do the right thing for their situation and members. This document highlights some good practice ideas and outlines our current response to legislative breaches or trustee actions.