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Dealing with COVID-19 practical considerations for trustees

As trustees of a pension scheme, whether defined benefit or defined contribution, there are specific issues that you should be considering given the coronavirus pandemic.

Trustees meetings

The trustees have a responsibility to act in the best interests of their members and those interests are served largely through the medium of the trustee meeting. Practically trustees may want to delay any forthcoming face to face trustee meetings or move them online using Webinar, Skype, Zoom or similar carrying out duties remotely. This change in habit is important to protect trustees, certainly it would be very difficult if a number of trustees were to become ill so that there was no longer a healthy quorate group who could make decisions going forward.

It may be appropriate for trustees to check their scheme rules to ensure they have the appropriate powers of administration to allow the flexibility to run their meetings remotely. 

As many businesses do some trustee bodies could benefit from having “contingency” plans in place to deal with illness among the trustee board, ensuring that information is shared as to people’s current situations, whether they are isolating or in fact ill. This could also cover situations relating to the signing of documents, the giving of instructions and operation of the bank account, as well as emergency contact detail.

Any personal information shared should be done subject to the consent of the individuals concerned.

Investment strategy

Unsurprisingly, the pandemic has had an impact on investments and share indices around the world are experiencing significant shock. We would expect trustees to be considering whether they want or need specific advice from their investment advisers on the current climate. However, pension commitments are long term so it is entirely possible that the advice would be that no immediate action should be taken in such a short-term situation of volatility. We expect, however, that investment strategies will require revisiting at some level over the coming months.

Membership changes

Sadly, some schemes may experience an increase in member deaths and potentially ill health cases. Trustees should be clear of their processes for dealing with death benefit cases in particular and might in certain cases want to revisit these.

Changes in work practice may also impact on members if they find that they are not being paid because they have to take time off to self-isolate or there is a delay in payment or confusion around whether or not individuals should seek payment, all of which will have a knock-on effect to any contributions that they would normally be contributing to the scheme. Employers may also see an increase in requests from individuals to change salary sacrifice arrangements. Depending on the severity and longevity of such changes there could be an increase in members opting out of active membership as individuals strive to manage financial strains.

There may also be redundancies in the business impacting on the membership and potentially the trustee body itself. Redundancies may also trigger a rise in early retirement requests.

Communication with members and employers will be very important given the possibility of some variability in income. For some trustees this could create a need to deal with cash and investment allocation differently. It is also possible that any short-term disruption to the regular payment of agreed contributions could be reportable as a late payment depending on the content of any schedule of payments/contributions. The trustees may need to consider this with their legal advisers to decide if reportable late payments have occurred.

Employer Covenant

Trustees of defined benefit schemes should be considering what if any impact the COVID-19 pandemic could have on the covenant of the employer/s supporting their scheme. It is of course early days. The Pensions Regulator expects to issue its annual funding statement shortly after Easter and it may be that it provides some commentary or guidance on covenant issues in light of the pandemic.

We anticipate going forward trustees requesting details of employer’s business continuity plans or as a minimum confirmation that such plans are in place. By extension consideration should be given to obtaining written assurances as to the robustness of the business and how they propose to deal with the pressures brought to bear by the current pandemic. Trustees may want to seek external expert employer covenant advice as well, focussed primarily on the impact of the pandemic.

Scheme administration

Administrators of pension schemes may have to deal with staff absences and disruption to services. Clearly that can have a huge impact on a pension scheme where there are a number of essential administrative functions going on at any one time. We would advise trustees to contact their administrators to seek confirmation from them as to their contingency plans. Depending on the responses given trustees may seek specific assurances, further information or look at putting in place other resources to cover any areas of concern. Consideration by trustees’ legal advisers of the existing contractual obligations with such third parties may also be required.


This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.


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