The Pensions Regulator commits extra funding to regulatory work

The Pensions Regulator (TPR) plans to toughen up its regulatory approach to failing and high risk pension schemes over the next three years as it increases the budget for monitoring and compliance following a spate of pension failures

In the latest three-year budget plan, TPR has allocated £4.3m to monitoring and oversight of pension compliance in a bid to protect pension savers, an increase of 5.2% over 2017/18 spend.

This follows criticism of TPR over its oversight of the BHS pension debacle when the retailer went into administration and the pension scheme had to be put into special measures through the Pension Protection Fund.

This will help TPR to crack down on sponsoring employers who are not taking their duties towards their pension schemes seriously, as well as launch a new anti-scams campaign to help prevent savers from being ripped-off.

It will also focus on driving up standards of trusteeship and stewardship across all pension schemes, authorising master trust schemes and ensuring defined benefit (DB) schemes are effectively regulated.

The threat of potential fallout from Brexit is also flagged as a challenge for the pension industry. TPR cites ‘changes in some industries [sectors] and the UK transitioning to a post-Brexit environment mean some schemes will need to reflect on potential impacts on their employer covenant’.

At the same time, the aging demographic is also a concern, while pension freedoms and the wider risk for those defined benefit (DB) pension schemes which are not funding their schemes appropriately or managing cash flow.

TPR chairman Mark Boyle said: ‘The pensions landscape has been changing significantly. We are embedding a new regulatory culture and reinforcing our regulatory teams on the frontline.

‘In the coming year, you can expect to see us being more vocal about our expectations of those we regulate and intervening quickly and decisively through our wide-ranging regulatory activity and enforcement powers so that workplace pension schemes are run properly and people can save safely for retirement.’

Over a third of headcount (34%) this year will be allocated to TPR’s frontline regulation team which together with automatic enrolment (16%) and policy and advisory work (20%), means a significant majority of resources will be directly focused on delivering better regulatory outcomes. During the year, TPR plans to increase its headcount by 12% as a result of its increased workload and remit.

TPR’s eight priorities are:

  • enhancing and executing effective regulatory approaches across all schemes;
  • promoting good trusteeship through improving governance and administration;
  • effective regulation of DB schemes;
  • effective regulation of master trusts;
  • ensuring employers meet their ongoing automatic enrolment (AE) duties;
  • preparing for the impact of Brexit;
  • equipping its staff to meet the challenges TPR faces;
  • developing an approach to regulation that focuses on more proactive and targeted work and uses a wider range of regulatory interventions.

TPR chief executive Lesley Titcomb said: ‘Our corporate plan sets out how we are becoming a clearer, quicker and tougher regulator. It highlights our wide regulatory remit including ensuring employers meet their workplace pension duties, authorising master trusts, securing funding for defined benefit schemes and a continued commitment to fighting scams.’

The Pensions Regulator Corporate Plan 2018-2021 issued 10 May 2018

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