Industry view – The Pensions Regulator


Mike Birch, director of supervision at The Pensions Regulator


WATCHING SAVERS’ BACKS


Last year we talked about how our relationship supervision team developed strong relationships with schemes to ensure robust governance to protect sav- ers. However, as well as our on-going supervision,


we also deploy rapid


response and event engagement teams to check savers remain protected in the event of corporate transactions. Our latest compliance and enforcement bulletin shows our teams worked on around 150 different interventions between July and September 2019. Our event engagement teams respond quickly to circumstances which pose increased risks to schemes. This includes corporate restructuring, major transac- tions, employers in financial distress and reports indicating poor governance or administration. The teams operate across DB, DC and public service schemes. Our interventions are prompted by mar- ket intelligence, whistle-blower reports, actuarial valuations, notifiable events and breaches of law, trustees and advisers, and the Pension Protection Fund. We consider several factors before deter- mining whether and how to engage,


focusing on the risks to the scheme and how these fit with our statutory objec- tives. Where we do engage, our first point of contact is usually through the trustees or scheme manager. We seek to establish how trustees are assessing and respond- ing to the event which we have identified, offer recommendations and expect them (and their advisers) to take that guidance into account. Where required we engage directly with the scheme employers and other stakeholders.


Employers should expect us to engage early where significant corporate events occur which have the potential to cause material detriment to the scheme. Trus- tees should also engage early with us and be transparent. We will look to establish that they are appropriately equipped, advised and doing what we would expect, and that employers are sharing adequate and timely information with trustees. Where we engage directly, we will look to support the trustees through negotiations to achieve the best outcome for savers. A recent example of where we intervened followed the announcement that an inter- national parent company was closing its UK operations. On the day of the announcement we contacted the trustees to request information for our initial assessment of the situation, and within five business days we held a call with the trustees and their advisers.


Our discussions with trustees, and in sub- sequent meetings, focused on the propos- als offered by the parent company. These proposals were conditional on the trus- tees entering a legally enforceable memo- randum of understanding (MOU) within one month. Working with the trustees we


challenged the proposals, and tested the tight timeline set for the agreement of the MOU, while supporting the trustees in moving forward with the negotiations as rapidly as possible. We also gave feedback on several technical aspects of the propos- als to work towards an acceptable out- come. Despite the fluid and fast-moving nature of the discussions we were able to support an agreement between the trus- tees and the parent company that was concluded within the one-month time frame originally set.


As this example shows, engagement works best where all parties involve us early in their negotiations, are transpar- ent and work co-operatively.


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14 | portfolio institutional February 2020 | issue 90


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