The Regulator has updated its November 2020 guidance for trustees of schemes where the sponsoring employer is distressed. The original guidance focused on the economic impact of Covid-19, whereas the largely unchanged updated version notes the ongoing challenges currently faced by employers.

The Regulator's expectations of trustees remain much the same. It expects trustees to have effective covenant monitoring in place as part of their integrated risk management regime and also urges them to read the updated guidance.

Examples of corporate activity which could lead to a worsening of the scheme's position include a lender seeking security ahead of the scheme or the employer selling a valuable business.

The trustee checklist to reduce scheme risk in the face of employer distress include such actions as regular sponsor engagement and seeking specialist advice.

Please also see our earlier blog from January 2022 looking at trustee vigilance in times of economic uncertainty.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.