Having the right people steering the ship, and taking timely and focused advice on board will help schemes to keep members afloat and recognise when tough decisions are needed.
As Josephine Cumbo highlights in this article, the current crisis highlights the potential for differing outcomes depending on the quality of governance of a pension scheme.
In our opinion the guiding stars for employers and trustees navigating these choppy waters are open and honest dialogue, contingency planning, and being prepared to take tough decisions and act quickly where necessary.
A strong relationship between key personnel at the employer and on the trustee board along with a good flow of information will help set the course and can hugely speed negotiation time.
It is critical that all involved understand the range of destinations. This can mean understanding powers under the scheme rules and which employers are on the hook, to the availability or otherwise of contingent assets, and in some cases what a change of covenant or above-PPF deal could look like.
It is easier than ever for Trustee boards to meet and receive advice virtually. With the help of advisers and official guidance, asking the right questions and being prepared to act decisively can make a real difference. Some employers and trustee boards find it increasingly helpful to have the experience of a professional trustee at the helm, particularly where acute conflicts of interest need to be managed; others find a dedicated sub-committee effective.
We have seen excellent examples of these behaviours so far, and have welcomed the Pensions Regulator's guidance to date. The guidance is particularly valuable for schemes with smaller governance budgets. It would be useful to see more guidance as we approach the end of the initial three month period the guidance sought to cover.
There is no doubt that trustees — even professionals — will find these times tough as they make decisions in difficult circumstances. But the crisis has the potential to exacerbate the governance gaps between well and poorly-run pension schemes, with savers and pensioners in the latter category effectively at greater risk of becoming second-class members.