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‘Clearer, quicker, tougher’: UK regulator sets out three-year plan

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The UK’s Pensions Regulator (TPR) plans to increase its staff by 12% ahead of the introduction later this year of new powers granted by the UK government.

In its latest three-year corporate plan, covering the 2018-21 period, TPR vowed to become “a clearer, quicker and tougher regulator”.

“Over the next year you can expect to see us improving our effectiveness further by taking action in a broader and more visible way to improve outcomes for retirement savers,” chief executive Lesley Titcomb and chair Mark Boyle wrote in their introduction to the plan. 

“We will ensure our expectations are better understood and use a wider range of regulatory tools, with the aim of putting things right and keeping schemes on the right track for the long term so members receive the benefits to which they are entitled.”

The UK government proposed new powers for the regulator in its DB policy white paper, Protecting Defined Benefit Pension Schemes, published in March.

These included an expanded remit to fine directors and companies to tackle irresponsible activities that might hurt pension schemes, and a tightening of the rules around mergers and acquisitions.

“We have a wide range of powers that we use flexibly, reasonably and appropriately,” Titcomb and Boyle wrote. “We are likely to take enforcement action where we encounter wilful or persistent non-compliance, where our earlier efforts to encourage compliance with the law have not had the desired effect, or where we uncover evidence of malpractice.”

TPR said it would intervene “more widely” and would tailor its actions towards specific circumstances. “This will enable us to use our resources more effectively and to be clearer in our expectations, quicker to respond and tougher where we need to be,” it said.

The regulator has come under fire in recent months from politicians in the wake of the collapse of engineering firm Carillion and the transfer of its pension schemes to the Pension Protection Fund. It was also criticised for failing to protect members of the British Steel Pension Scheme from poor advice during the scheme’s high-profile restructure.

DC’s growth gives regulator new focus

A core focus for TPR over the next three years would be the defined contribution (DC) market, it said. Following the introduction of auto-enrolment, DC funds have overtaken defined benefit schemes in terms of membership.

NEST

From October this year, DC master trusts such as NEST and The People’s Pension will be subject to a new authorisation regime to be implemented and monitored by TPR according to regulations and best practice guidelines that will be confirmed during the summer.

TPR said in its corporate plan: “In delivering the new authorisation and supervision regime, we will continue to engage with the UK’s master trusts before they apply for authorisation.

“We will clearly set out the standards they will need to meet, and we will work closely with those who intend to exit the market, to encourage a smooth transition process.”

TPR and Brexit

The UK regulator laid out its plan for preparing for the UK’s withdrawal from the EU in March next year. One of its eight priorities for the next three years outlined the importance of “building understanding and resilience, with an appropriate regulatory response to the Brexit outcome”.

“We will continue to work closely with the government and wider pensions industry to build our understanding and response to the potential effects of Brexit on schemes.

“This work will include responding to any changes to European pensions law and requirements into UK law, and assessing the implications for cross-border schemes.

“As further analysis of the effects of Brexit on UK pension schemes becomes available, we will provide specific guidance to schemes and the industry where appropriate.”

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