4 May 2021: Argyll opens Leeds office

17 Jun 2020: TPR updates Contribution Deferral guidance

5 Aug 2019: TPR's tougher stance on recovery plans

7 Mar 2019: TPR’s Annual Funding Statement a game-changer

7 Dec 2018: DWP publishes superfund consultation

26 Jun 2017: TPR agrees settlement with Coats

30 Apr 2017: PM promises TPR M&A powers

28 Feb 2017: TPR agrees settlement with Sir Philip Green

9 Nov 2016: Brexit so far

8 Nov 2016: BHS ripple effect

2 Nov 2016: Sir Philip Green sent warning notice

1 Nov 2016: Argyll Financial becomes Argyll Covenant

3 Oct 2016: Tata Steel update

2 Jun 2016: BHS to be liquidated

29 Mar 2016: Tata plans sale of UK Steel

3 Sep 2015: TPR takes dim view of late valuations

13 Aug 2015: New TPR covenant guidance

28 May 2015: Contribution notice in Carrington Wire case

22 Dec 2014: Third warning notice for Guinness Peat

18 Dec 2014: New PPF rules for Asset-Backed Contributions

19 Aug 2014: TPR announces Lehman Brothers settlement

10 Jun 2014: TPR publishes revised funding code

27 Mar 2014: EC postpones holistic balance sheet

20 Mar 2014: PPF announces new insolvency risk model

17 Mar 2014: PPF guarantees harder to certify

7 Feb 2014: Argyll Financial submits consultation response

2 Dec 2013: Regulator publishes new draft funding code

19 Nov 2013: Asset-backed contributions guidance from TPR

22 Oct 2013: FSD warning helps MF Global scheme buyout

10 Sep 2013: TPR supportive of Kodak restructuring

31 Jul 2013: Schneider Electric acquires Invensys for £3.4bn

24 Jul 2013: Supreme Court overturns FSD super-priority

8 May 2013: Support for employers in TPR's Statement

17 Jun 2020: TPR updates Contribution Deferral guidance
Since the implementation in March of lockdown measures by the UK government in response to Covid-19, TPR has published guidance which encourages trustees to be flexible and open to deferral requests from employers. 

Initial guidance published on 27 March recognised that visibility around the impact of the pandemic on employers may be poor.  Therefore trustees could grant an initial 3 month deferral based on the limited information available.  However, TPR expects trustees to not unquestioningly extend their original 3 month suspensions, rather they should undertake due diligence on the employer’s financial position before agreeing a new deferral.  

The over-arching concern is that schemes must be treated fairly with other stakeholders including shareholders and other creditors.  Based on TPR’s guidance to date, trustees’ focus is likely to be on the following:
  • What is the justification for the deferral?
  • What other cost-saving has taken place?
  • Have other creditors been approached?
  • Are lenders being supportive?
  • What other sources of funding have been considered?
  • What are the prospects for the employer’s survival?  ie will the employer be in a position to repay the contributions
The latest guidance dated 16 June reinforces earlier guidance in that agreeing to a deferral trustees should consider the following:
  • All dividends and other forms of shareholder distribution should stop throughout the period of suspension and not start again until the deferred contributions have been paid
  • Where contributions have been suspended or reduced, trustees should agree arrangements for contributions to start again
  • Where a deferral is agreed as part of a refinancing, trustees should fully understand the terms aof that refinancing.  If possible they should try to seek the same recourse and access to security/valuable assets, for example, with the deferred sums being given the same protections as the new money lending
  • Enhanced monitoring of the employer’s trading and liquidity position is likely to be required over the short to medium term.

The latest guidance can be found here.

Argyll comment:  we have seen a proliferation of contribution deferral requests in the last few months.  The challenge for trustees is still to understand the likelihood of recovering those contributions.  Covenant advice needs to consider the employer's ability to see through the short term challenges and in particular whether it has sufficient liquidity (access to funds) to absorb losses. 

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