Virus sparks new fears for pensions

THE Pensions Regulator is understood to be preparing for a sharp increase in the number of at-risk pension schemes caused by the coronavirus threatening the survival of their sponsoring companies.

Additionally, it is believed that the regulator is braced for a spike in the number of organisations requesting permission to either reduce or suspend the deficit repair payments they are obligated to make to their defined benefit (DB) pension schemes.

According to the regulator, so far around 10 per cent of companies with DB funds in deficit have either suspended or cut repair payments.

A spokeswoman for TPR said: “We have been engaging with trustees, employers and administrators to address key Covid-19 challenges – including the increased risk of insolvencies. We have published guidance to help schemes and employers navigate the crisis. We are determined to help where we can by taking a pragmatic approach while remaining focused on the need to protect savers.”

The pandemic has left many firms struggling. If a group is at risk of failure and has a DB scheme, it must obtain permission from the regulator for any restructuring plans it has, to ensure that workers’ pensions are protected. If it still fails, its scheme will go into the industry lifeboat fund.

Elsewhere, AJ Bell and Halifax were named as the best providers of DIY pensions by consumer champion Which?. It said both groups had the highest customer satisfaction rating at 72 per cent for their self-invested personal pensions (Sipps). Lowest ranked were James Hay and Bestinvest.