Pensions360

The Pensions Regulator has issued guidance for supervising the commercial consolidation of defined benefit (DB) pension schemes into Superfunds.  Consolidation into "Superfunds" may be an attractive option for employers wishing to discharge their pension obligations where the cost of a traditional buy out with an insurance company is beyond reach. After transfer to a Superfund the link with the employer will be severed.  At the same time, a Superfund is expected to provide a robust level of security for members' benefits.

The government's Coronavirus Job Retention Scheme (CJRS) has thrown a lifeline to many employers and to their employees who might otherwise have lost their jobs in the current Covid-19 crisis.  For employers taking advantage of the CJRS (and the trustees of an employer's pension scheme), the scheme gives rise to several pensions-related issues, in particular:

• how pension contributions should be calculated;
• dealing with salary sacrifice arrangements;
• reducing contributions to the auto-enrolment minimum;
• auto-enrolment duties in respect of furloughed employees;
• the impact on benefits from open defined benefit (DB) schemes;
• the position of furloughed trustees; and
• life assurance benefits.

Our attached note sets out our current understanding of how these issues may be addressed, based on the recently issued Direction from HM Treasury and updated guidance from HMRC and the Pensions Regulator. 

The Pensions Regulator has published guidance on how it expects pension contributions to be paid during the current pandemic and, in particular, in respect of employees on furloughed leave.