TPR plan welcomed, but concerns remain over consistency

The pensions watchdog has made it clear in recent months that it wants to step up its game. A recent example is its announcement that it will appoint High Court Enforcement Officers to seize assets of employers who do not pay a pension fine.

Its corporate plan for 2018-2021, published on Thursday, emphasised that the regulator plans to improve its effectiveness further by taking action “in a broader and more visible way” to improve outcomes for savers.

The watchdog plans to intervene more widely, and will tailor its approach to the specific circumstances of a scheme. It says that this will enable it to use its resources more effectively and to be clearer in its expectations.

The development of different regulatory tools and the improvement of data the regulator holds will form part of this plan. The watchdog will also continue to increase the visits and inspections it makes.

“To help educate the market, we will continue where possible to publicise our regulatory actions,” the report promises.

The effective regulation of defined benefit schemes will be a priority, while it works with the government to implement the proposals set out in the white paper on the future of DB schemes. It will focus further on smaller DB schemes, while continuing to engage proactively with larger schemes.

Continued focus on trustee standards

Trustee standards have come under scrutiny in the last few years, and the regulator’s 21^st Century Trusteeship programme has been working to improve the way schemes are managed.

Driving up standards of trusteeship and stewardship across all pension schemes remains a key focus for the watchdog, which said it will be “delivering some important work” in this area over the course of its three-year plan.

This involves being clearer with trustees of smaller schemes as to the standards the regulator expects of them.

Mastertrust regulation also features prominently in the watchdog's corporate plan, with authorisation of the first mastertrust schemes due to begin in October.

The regulator’s chairman Mark Boyle said in a statement: “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."

With increased intervention comes the need for resources, and the regulator plans to expand its headcount this year by a further 12 per cent while improving its systems and processes.

This readiness to be involved in situations such as corporate transactions at an early stage is already visible.

Darren Redmayne, chief executive officer of Lincoln Pensions, said the past six months in particular had seen “greater levels of engagement, particularly... where there are corporate transactions”, with the regulator “wanting to be proactively involved in discussions between the sponsor and the trustees”.

Industry wants to see consistency

Redmayne said “the regulator has a delicate and challenging balancing act between protecting member benefits and – on the other hand – not impacting sustainable growth”.

“In being clearer, quicker and tougher, and in applying this delicate balancing act, I think the industry is looking for consistency,” he added.

With the regulator getting engaging more proactively with schemes “it’s likely that the regulator will be asked what its view is” of things like corporate activity, meaning it will start to influence common practice in the industry.

A number of years ago, “the regulator was very much a referee and not a player, and only sort of came on to the pitch when required”, Redmayne noted, but said that is starting to change.

Concerns over smaller schemes

Pensions Management Institute president Robert Branagh welcomed the regulator’s plan, but said there is still a lot of work to do regarding smaller schemes.

“Although it gets some mention in TPR’s corporate plan, I think I would welcome much more focus on trying to help those [small and medium-sized enterprises] and smaller pension schemes cope with what’s going to be... a much tougher place to pay for and support good UK pension provision,” he said.

“Trustees of smaller schemes have got a very difficult job to do,” Branagh added.

A spokesperson from the regulator said its objective was to make sure trustees meet its current, clarified expectations and are a "knowledgeable, empowered first line of defence for scheme members", rather than setting new rules.

“We are not intending to impose new or higher standards of governance on schemes nor will we be producing rafts of new guidance. We are looking to make our expectations clearer as to what good and bad governance looks like,” the spokesperson added.