The Pension Regulator has given defined benefit transfers a three month hiatus while also allowing employers to halt contributions in response to the covid-19 crisis.
The delay aims to help administrators manage their resources at a time when activity levels are very high and firms are dealing with reduced staff numbers and operational challenges. It also helps mitigate the risk of members being taken in by scams, or simply making poor financial planning decisions in response to the crisis situation.
"For many schemes, the current funding position, calculated using consistent assumptions as for the valuation, will be significantly worse and the deficit materially larger," the TPR said.
For many schemes, the current funding position, calculated using consistent assumptions as for the valuation, will be significantly worse and the deficit materially larger"
The guidance also allows employers to delay or suspend contributions where necessary. They can also delay the submission of recovery plans where such information is currently expected by the Regulator.
Tom McPhail, head of policy at Hargreaves Lansdown, said the suspensions laid out by TPR "make sense" to prevent any businesses from going under.
He said: "‘Like the government and other public bodies, our financial regulators are pulling out all the stops to help businesses and individuals get through this time of crisis.
"Keeping the business alive is likely to be in the long-term best interests of the members, even if it means a short-term hit to the funding position of the scheme. Crucially, such action is conditional upon the support of the firm's bank and other funders and would have to be accompanied by the suspension of any dividend payments.
Jonathan Camfield, partner at LCP, added: "The current market volatility means that handling requests for DB transfers is even more challenging for pension schemes than normal, and some will welcome the opportunity to take more time to consider their approach.
"But the legal situation is complex, with trustees potentially facing challenge whichever route they take. If trustees hold up transfers and transfer value levels fall, or the company goes bust in the meantime, members may complain that they have lost out. But if trustees allow a transfer that they could have delayed, and client investments perform poorly, there may be a different set of challenges.
"Trying to do right by the members who want to stay in the scheme and by those who want to transfer out will be difficult balancing act in some cases.