Whether you are more in the Mary Poppins or Corporal Jones camp when it comes to dealing with unexpected emergencies like the Coronavirus outbreak, the choice between taking minimal precautions for continuing business operations as normal and panicking is not very palatable. Pension fund operations are highly complex and, just like their counterparts in the commercial world, involve the integration of many parties who to some degree all rely upon each other to keep a basic service (of paying pensions) going. With different organisations adopting different strategies to cope in the current crisis, what should pension funds be doing?

1. Core priorities: paying pensions

Trustees and local authorities should be engaged with their administrators to ensure that, as far as possible, pension payments are made on time. Fortunately, with the automation of pensioner payrolls, payments should continue to be made as usual but business continuity plans within the administration team should be reconfirmed as robust and appropriate. Regarding the collection of contributions, funds should also make sure that there is no unexpected interruption to cashflows going into their accounts.

The processing of individual member payments (e.g. on retirement, death or transfer) is time-dependent as there are many statutory guidelines to consider. Fortunately, these are generally fairly long-term, although the legislation governing statutory timescales is notoriously inflexible, so trustees and their administrators should consider service level agreement targets and how realistic they are.

2. Decision-making

Most modern trust deeds and rules, and articles of association governing corporate trustees, will allow for meetings to be held remotely by video or telephone conference facilities. (Although, strangely, some local government pension committees do not have the same flexibility, so advice may be required on individual council constitutions and delegated authorities.) If the current situation persists and your scheme does not have this flexibility, you run the risk of not being able to make valid decisions in law and you should consider allowing for such flexibilities.

There are, however, different levels to decision-making. The physical execution of documents, including bank mandates and investment instructions, also need to be borne in mind and trustees should ensure that they have appropriate systems in place to achieve all that is necessary to keep the mechanics of scheme operations in place.

3. Risk registers

Most scheme risk registers will not have considered Covid19 (or anything like it) outside of the context of a general shock to the investment markets or the employer covenant (with its knock-on effect onto the scheme’s funding strength). Despite guidance from The Pensions Regulator and the Pension Protection Fund about contingency planning, our experience is that many schemes have not considered the detail of how they would continue to operate in an emergency and, for instance, how they would communicate that fact to scheme members. We explored this issue in a factsheet on inadequate strategic planning as well as the key person risk run by many schemes which are too reliant on key individuals either within the trustee board or from their employers or advisor teams. Trustees should therefore be considering (or reassessing) strategic contingency planning at the earliest opportunity.

And finally, don’t forget about the vulnerability of your scheme’s own immune defence systems. Sadly, the cyber-criminal fraternity are seeing Coronavirus as an opportunity to send all manner of apparently helpful phishing emails to “help” recipients cope with emergency planning which can introduce an electronic virus into your systems at the click of a button. Remember to check your scheme’s insurances for business interruption cover and make sure you are familiar with exclusions.

And on a personal level, if you get bored with singing “Happy Birthday” twice while washing your hands, you could try singing “supercalifragilisticexpialidocious”. (We think that six times would be sufficient.)