TPR shows off tougher approach alongside single-source code of practice
The Pensions Regulator's use of its frontline powers has risen by a third over the past year, it has revealed, as the watchdog cements its “clearer, quicker, tougher” ethos into its practice.
A wide variety of powers have seen greater use, according to TPR's annual report released on Thursday, while the regulator simultaneously announced plans to clarify its expectations with a single code of practice for trustees.
Frontline powers were used 32 per cent more often in 2018-19, while the number of cases the organisation opened increased by 24 per cent.
More schemes had trustees forcibly appointed than the previous year, an increase of 11 per cent. It comes as the regulator mulls the compulsory appointment of a professional trustee to every board. Meanwhile, 37 per cent more auto-enrolment fines were levied against employers.
Some of the schemes that I work on are quite small and they too have been getting interaction from the regulator that they haven't done previously
The regulator did miss four of its 22 key performance indicators, falling short of its targets on trustee toolkit takeup, proactive casework, employee engagement, and staff skills development. The annual report explained that it has shifted it priorities away from the toolkit since setting the target and that its proactive casework has been offset by the introduction of one-to-one supervision, actually increasing the number of scheme engagements.
TPR said it will work to improve its missed HR KPIs, which include just 54 per cent of employees feeling they are "supported and motivated to do the best job they can".
The regulator's new chief executive Charles Counsell commented: “Our new ways of working ensure we have better oversight of those we regulate, improved identification of risks and a sharper focus on how best to use our powers.
“In the past 12 months we have used our new approaches to address, deter and punish inappropriate and dishonest activity. Results include our first prosecution for fraud, our first custodial sentence and the courts handing down the largest ever fine following a TPR prosecution.”
Regulator more present than ever
Alongside the increased use of its powers to punish or improve governance, practitioners say the regulator is making more soft interventions and taking an interest in schemes it previously had little contact with.
One-to-one supervision is so far limited to the largest schemes, but even small schemes can now expect to be asked questions by the regulator, according to Vassos Vassou, a trustee representative at Dalriada Trustees.
"Some of the schemes that I work on are quite small and they too have been getting interaction from the regulator that they haven't done previously," he said. TPR is now likely to contact defined benefit schemes ahead of a valuation setting out its expectations, he said.
Single source of guidance
To help trustees meet its expectations, the regulator is also planning to consolidate its code of practice for trustees, which currently spans a mass of different documents and web pages.
"Over the next year we will be reviewing our codes of practice to reflect the Occupational Pension Schemes (Governance) (Amendment) Regulations 2018. We expect that this will involve combining the content of our 15 current codes of practice to form a single, shorter code," the watchdog said in an online update.
TPR will begin with those codes that most need updating, and will launch a formal consultation on the single code later this year after engaging with stakeholders.
Mr Vassou welcomed the idea, noting that for trustees with responsibilities that span several of the existing 15 codes, it can be an arduous process to ensure compliance.
"If you're a hybrid scheme for example, you get caught by both sets [of codes] and you need to make sure you look in different places to make sure you're not falling foul of something," he said. "From a pragmatic perspective it's going to be easier for trustees to make sure they don't trip up somewhere."