While defined contribution trustees are being warned they could be facing more disruption than just investment volatility, institutional investors are calling on companies to mitigate the coronavirus social impact. At the same time, risks of cybersecurity and fraud are on the rise. Read our round-up of pensions and finance news about the coronavirus outbreak.
DC schemes facing ‘significant disruption’
Defined contribution schemes are not only seeing significant disruption in the investment markets, but there is also potential for pension scheme governance and members’ decisions to be affected, warned XPS Pensions Group. The consultancy has issued a series of recommendations for DC trustees, such as providing support to members who are approaching or considering retirement, as these individuals are “particularly at risk due to their decisions often having ongoing effects”. Pension professionals should also monitor their scheme’s investment performance and update the investment strategy, and be “mindful of the different groups of members in the scheme and how the market volatility will influence them”. Trustees should also monitor engagement with members and issue “issue clear, helpful communications”, while considering the ongoing governance, by continuing to talk to advisors, the scheme sponsor and hold virtual trustee meetings.
Schemes urge companies to mitigate Covid-19 social impact
The Church of England Pensions Board, the Local Authority Pension Fund Forum and the Northern LGPS are among 195 global institutional investors calling on companies to mitigate the coronavirus social impact. In a joint statement published on Thursday, the schemes called on the business community to step up as corporate citizens, and recommended measures corporations can take to protect their workforces, their communities, their businesses and the markets as a whole amid the Covid-19 pandemic. The statement, organised by Domini Impact Investments, the Interfaith Center on Corporate Responsibility and the New York City Comptroller’s Office, stated that with so much uncertainty and volatility in the markets, companies can ill afford to lose the human capital they have built or the value chains they rely on to deliver their products and services.
Market turbulence could increase pension scams risk
The market turbulence resulting from the coronavirus outbreak could lead to a spike in pension fraud attempts, a consultancy has warned. RSM echoed recent warnings from the Pensions Regulator about the increased risk of members being lured into transferring out their defined benefit pension into so-called ‘safe haven’ funds, but which offer little in the way of protection. The company also warned of increased fraud and data security risks associated with pension staff working from home, as usual cyber and data controls might be weakened if staff use home WiFi networks for sensitive data transmission between service providers. Pension administrators’ controls could also be compromised, RSM added, if normal office protocols are unable to be followed, for instance over member identity or second checks over transfer value calculations.
