The Pensions Regulator (TPR) has produced a short report which summarises the key findings on its working practices, and the main recommendations which will be taken forward to address the challenges it faces. The report follows an external review commissioned by PwC and further research by Britain Thinks.
The review sought to understand the current perceptions of the Regulator, what the future risks for the Regulator might look like, and how their current approach may need to change in order to respond to those risks.
The way in which pensions are regulated will experience further changes this winter once the Department for Work and Pensions (DWP) publishes its white paper on the future of defined benefit (DB) pension schemes.
The review provided a number of recommendations for TPR to consider. These were assessed in turn and then split into six key groups.
- External reputation
- TPR’s identity
- Broadening the regulatory approach
- Exercising the full range of powers
- Improving regulatory activity
- Evolving the operating model
How will TPR change?
In response to the recommendations, TPR will implement five main changes in order to become more effective and risk responsive. These were reported as:
- Clarifying their identify and improving how they engage
This change relates to TPR building and communicating a clearer identify across the wider industry. That way, priorities and focus areas can be understood by a broader range of stakeholders and other public bodies, such as the Financial Conduct Authority, HMRC and the Pensions Ombudsman.
- Setting clear expectations
This involves being more prescriptive about what TPR expects from its stakeholders in order to meet their legal duties. Rather than introducing new requirements, the emphasis will be on being clearer in communications; an example being the provision of good and bad practise procedures.
TPR also promises to take action against those who are not meeting standards, and publicising the actions they have taken.
- Improving regulatory oversight
In order to improve regulatory oversight, TPR will aim to develop a broader range of approaches to their own responsibilities. This means abandoning the ‘educate, enable, enforce’ approach which it sees as no longer being an appropriate response to the wide range of responsibilities falling with TPR’s remit.
The use of data and better supporting technology will also become a more prominent part of TPR operations.
- Using a wider range of regulatory interventions
The fourth change which will be implemented by TPR relates to broadening its approach to casework in order to exercise its full range of legal powers across each of its pension responsibilities.
This will be supplemented through targeted communications and clear guidance.
- Being more efficient and effective
The final change is focused on improving efficiency, effectiveness, consistency of casework and other regulatory processes in order to create a more adaptable approach to the challenges which TPR faces.
TPR is now undergoing the next phase in order to develop and pilot their new approach. A progress update is expected in spring 2018.
DWP white paper
As referenced, the review coincides with the DWP announcement to publish a white paper in winter about the future of DB pension schemes.
The DWP have said that the paper will provide “more proactive powers rather than reactive” for TPR, and consider innovative delivery structures such as consolidation.
Both the DWP white paper and TPR review signal a change to the way in which workplace pension schemes will be regulated. This is appropriate considering the vast recent changes which the industry has experienced, such as the introduction of auto-enrolment, the growing prominence of defined-contribution schemes, and the increased sophistication of pension scammers.
Therefore, we would encourage scheme trustees to be aware of the changes to regulatory procedures, and ensure that their own behaviour and practices are compatible with the new expectations that will be imposed.
For further information, please contact:
Stuart Evans, partner, Pensions
T: 0161 836 7793