The Regulator has published new guidance for trustees of DB schemes about monitoring for sponsoring employer distress and taking appropriate steps when necessary.
In its view, such trustees should be preparing now for the possibility that their scheme’s sponsoring employer faces difficulties.
The Regulator expects schemes to be treated fairly by employers. Trustees should monitor their employer’s trading and, where the employer needs to undergo restructuring or refinancing or is making disposals, they should have open discussions with it and other stakeholders to ensure that the scheme is being treated fairly to protect their members’ best interests.
This will require access to relevant information and trustees may need to take appropriate professional advice.
The Regulator is clear that all trustees should adopt an integrated risk management governance approach.
This should be fully documented, with practical contingency plans and suitable triggers for further activity.
The guidance contains illustrative examples of how a scheme’s position can be undermined by unexpected events, sudden changes in fortune or corporate activity.
Capita comment
In our view, many schemes could benefit from their trustees adopting an up-to-date integrated risk management approach. Trustees should take the opportunity to brief themselves on this new guidance and related background, particularly in these difficult and uncertain times.
Please speak to your usual Capita contact to find out more.