Home Knowledge The Pandemic & Pensions: Key Issues for Pension Trustees and Employers

The Pandemic & Pensions: Key Issues for Pension Trustees and Employers


With the world now in the grip of the COVID-19 pandemic, many businesses will face severe financial pressures, struggle to continue to deliver services to clients and customers and, in some cases, be forced to reduce their workforce. This will have implications for pension trustees who will also be wondering how best to react to the market turmoil arising from this pandemic.

We examine the key issues pension trustees and employers need to consider in navigating the fallout from this global crisis over the coming weeks and months.  

Business Continuity 

The Pensions Authority has recommended that trustees should confirm that:

  • pension payments to retired members are paid as they fall due;
  • other benefits are paid in a timely manner; and
  • contributions paid by members and employers are remitted promptly to the scheme.

Therefore, trustees should check in with their scheme administrator to confirm that these essential functions will continue and to establish what business continuity arrangements they have in place to deal with COVID-19. 

If agreed service levels are defaulted on, trustees should request administrators to make them aware of those issues as early as possible so that any contingency plans can be activated in good time. If any delays arise which expose members to losses, or “force majeure” clauses are invoked in the context of service disruption, trustees should seek legal advice.

Investments and Funding 

The crisis has led to an almost unprecedented level of market volatility. Trustees should contact their investment advisers to assess what impact the crisis is having on their existing investment and asset allocation strategies and whether they need to be revised. Interestingly, the Pensions Authority has cautioned trustees against making any immediate investment decisions, “unless absolutely necessary”. 

Trustees therefore need to be satisfied that any investment decisions they take are “absolutely necessary” as that is the benchmark against which they are likely to be judged in hindsight. This is particularly relevant for defined contribution schemes which have life-styling strategies within default funds which may no longer be appropriate. These strategies could unnecessarily crystallise losses for members and this is something trustees of those schemes should consult their investment advisers on urgently. 

For many defined benefit schemes, the crisis will have led to a deterioration in their funding position which may require existing funding arrangements with employers to be renegotiated. Therefore, trustees should consult with their actuarial advisers to assess what funding implications the crisis is likely to have and what steps can be taken now to mitigate adverse impacts for members. 

For certain sectors, the crisis could push employers into an insolvency or restructuring process. Scheme trustees in those sectors may have a limited opportunity to address any funding issues before an employer enters such a process. Any trustees facing those concerns need to get legal advice now and be ready to react quickly if trading conditions continue to worsen in those sectors. Doing so could be the difference between ensuring monies due to the scheme have preferential status in an insolvency process leading to full or part payment, or non-preferential status and no payment.

Trustee Meetings/Executing Agreements

Current requirements on social distancing effectively mean that trustee meetings will now have to take place by telephone or video-conferencing. However, this is only permissible if the scheme’s trust deed or the constitution for a corporate trustee allow meetings to take place using such technology. Scheme documentation should be checked, and amended if necessary, to allow meetings to take place remotely. 
When it comes to entering into any legal agreements, it may be possible to execute some agreements using e-signatures. However, the execution of deeds electronically is problematic under Irish law. It is not possible to apply an electronic seal to a document in Ireland at present; a company seal will need to be physically impressed on any deed. What can assist in this context is arranging for agreements and deeds to include provisions allowing them to be signed in counterpart. Read our previous article on e-signatures here.

Suspension of Contributions 

Many employers have been forced to make radical changes to their workforce arising from the crisis. This has ranged from redundancies and lay-offs to pay cuts and short-time. Some employers are also considering whether it is feasible to reduce or suspend pension contributions temporarily.

It will be important that employers think through the pension-related implications of any of these measures. Those implications will turn on both the individual employees’ contractual entitlements and the rules of the pension scheme itself, which may need to be amended to operate a temporary suspension of contributions. The Pensions Authority has confirmed that it is examining the suspension of contributions and will publish an announcement in the coming days.

Separately, for employers availing of the Government’s recently introduced Wage Subsidy Scheme, they will need to carefully consider how availing of that scheme affects both employee and employer pension contribution obligations. 

Critical Projects/Member Communications

Trustees and employees should consider if any upcoming projects will be impacted by the COVID-19 crisis. Any time-sensitive projects should be identified (e.g. upcoming deadlines for ECB statistical reporting, issuing benefit statements and preparing trustee annual reports) and procedures put in place to minimise the risk of missing any statutory deadlines. 

For any projects that are underway, they will now need to be managed in a way that minimises risks to members. For instance, any bulk transfer exercises that expose members to out-of-market risk may need to be suspended unless those risks can be minimised.

More generally, trustees should request their administrator to advise them of how members are reacting to the crisis so that they can assess whether any specific communications should be issued to members.

If you would like any advice on any of these issues, please contact Ian Devlin or your usual William Fry contact. Our partners, associates and our support teams are available as usual to support your business. We also have a specific COVID-19 Hub to help you.


Contributed by Jane Barrett





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