The Pensions Regulator (TPR) has updated its Covid-19 guidance, and from the start of next year defined contribution (DC) schemes and providers will need to report late contribution payments no later than 90 days after the due date, removing the exemption available earlier in the pandemic
At the start of the pandemic in March, TPR extended the maximum period DC pension schemes and trustees had to report late contribution payments from 90 to 150 days.
The aim was to give struggling employers more time to work with pension providers to bring late or missing payments up to date before enforcement action was taken.
TPR said the time frame for reverting to 90 days maximum late reporting has been set to ensure schemes have sufficient time to adjust systems and processes and to ensure employers who suffered the effects of the pandemic have been afforded the additional time to work with their provider to bring any outstanding contributions up to date.
In addition, from 1 October, other types of enforcement will start to return to normal. This includes enforcing the requirement for schemes to submit audited accounts and investment statement reviews. TPR will also revert to reviewing chairs’ statements submitted on and after that date as usual.
TPR temporarily eased these requirements so trustees could concentrate on the immediate risks the pandemic caused to their schemes.
Mel Charles, director of automatic enrolment at TPR, said: ‘With businesses and schemes adjusting to a new normal, now is the right time to return to our usual reporting and enforcement.
‘We have been clear that employers continue to have to pay contributions in full and on time and schemes have continued to refer serious automatic enrolment breaches to us which may require enforcement action to ensure compliance and to protect savers.
‘Our indications are the majority of employers are paying their contributions in full and on time and we have not seen any unusual increase in reports of late payments by pension schemes.’
Guidance for trustees considering employer requests for a reduction or suspension of deficit recovery contributions (DRCs) remains unchanged at this time, with TPR saying this remains under review.
While data shows around 10% of DB schemes have sought to defer DRCs, with discussions ongoing for others, TPR recognises that deferrals may continue to be appropriate in certain circumstances. This should be subject to trustees undertaking due diligence, particularly since TPR expects greater insight into an employer's short-term liquidity to have developed since the Covid-19 lockdown began.