The pensions industry has “unfinished business” on delivering adequate retirement incomes and must embrace the changes brought by the Pension Schemes Bill, the Pensions Regulator (TPR) has said.
Nausicaa Delfas, chief executive officer at TPR, wrote in a blog published today that the pensions sector needed to “really raise its game” to meet the challenges ahead.
“The very real risk is that millions of people who have defined contribution (DC) pensions will not have enough to support themselves in later life,” Delfas said. “And even if they do, without support, they risk losing much of their hard-saved money by taking the wrong decumulation option for them.”
She highlighted that TPR was adapting itself to prepare for the changing landscape and the anticipation of “fewer, larger schemes” in the future.
In Depth: Regulator’s new DC approach is a sign of things to come
Pensions Expert looks in detail at how the Pensions Regulator’s prudential approach to regulation is affecting all aspects of the industry. Read more
“For many years, we have been building a vision for how pensions can and should secure better retirements,” the CEO said. “We now have all the pieces of the jigsaw to make that vision a reality.”
For defined benefit (DB) pension schemes, Delfas said trustee boards needed to prepare for conversations around surplus release, even though the full legislation to facilitate this is not expected to be in place until the end of 2027.
“We expect DB trustees to have plans ready for how they would respond to sponsoring employers’ requests to release some of their scheme’s surplus and to take advice and undertake an appropriate level of due diligence,” she said.
“The industry needs to adapt, evolve, rethink what it means to be a trustee, an administrator, an adviser.”
Nausicaa Delfas, TPR
Surplus funds could be used to invest in UK assets such as infrastructure, housing, and clean energy. However, Delfas acknowledged industry warnings that “inappropriate surplus release could put retirees’ savings at risk”. TPR has recently set out a wide-ranging guidance document for endgame planning, including for schemes exploring run-on options.
Elsewhere in the blog, Delfas reiterated the regulator’s desire to raise standards in trusteeship, as set out in an industry speech last week.
She concluded: “TPR is transforming to meet the needs of savers. We are on the right path to ensure the Pension Schemes Bill will be the defining moment it promises to be.
“But everyone working in the pensions industry needs to be thinking now about their own role in making these reforms a success.
“The industry needs to adapt, evolve, rethink what it means to be a trustee, an administrator, an adviser. I am confident we will work together to complete the jigsaw and turn a vision of better outcomes for pension savers into a clear reality.”
