Building relationships to protect savers

This was a highly complex and far-reaching exercise that probed deeply into our ways of working and challenged accepted cultural norms and perceptions at the regulator.

We gathered views across the industry on how people want us to operate, and then designed a set of regulatory approaches that are fit for purpose for the next five to 10 years.

Industry stakeholders and our own staff told us that as a regulator we need to be clearer in our expectations, quicker to act and tougher in our approach towards rule breakers.

We have responded, and our TPR Future report sets out in more detail how we will be working proactively with more pension schemes through a new range of interventions to address risks sooner, clearly set out our expectations and take action where necessary.

We have not stepped away from being bold. One of the key outcomes of the TPR Future programme is to take a far more hands-on, supervisory approach, interacting with high-risk schemes on a regular basis to spot issues at a very early stage, rather than relying on routine engagement.

This new supervision approach is a milestone for pension regulation. It is a sea-change in how we will be interacting with the industry. It should leave employers and scheme trustees in no doubt that we are now a very different regulator.

I would like to make clear that this is not about us moving to a more punitive approach. This is about building closer relationships with schemes on a risk-based basis, so that together we can spot problems sooner and act before we need to consider using our more stringent powers.

So how will this work in practice?

For the first time, we will be launching dedicated, one-to-one supervision of, initially, the biggest defined contribution, defined benefit and public service pension schemes. We will maintain ongoing contact with these schemes reflecting their size and strategic importance within the pensions landscape.

But we are not stopping there. We will also be supervising a far broader group of schemes through higher volume supervisory approaches to address risks and influence behaviours. From this month, this type of intervention will be piloted with a number of DB schemes to check they are being treated fairly when it comes to dividend payments to shareholders.

We have learned through the successful roll-out of auto-enrolment how vital good communication is when it comes to changing behaviours. Using a broad range of communication channels and regulatory interventions will play a crucial role in preventing problems from developing in the first place.

Where our concerns are not properly addressed, schemes and sponsoring employers can expect us to take a more directive approach, which could ultimately escalate to issuing formal improvement notices or using our enforcement powers.

Lesley Titcomb is chief executive of the Pensions Regulator