The Pensions Regulator (TPR) in the UK is decreasing its use of powers to request information from pension funds, but the increasing size of schemes means requests are more difficult, according to Eversheds Sutherland.
A freedom of information (FOI) request, submitted by Eversheds Sutherland, has found that section 72 requests used to request information from pension schemes if the regulator suspects wrongdoing fell to 11 in Q4 2023, down from 49 in the Q4 2018.
The request also showed that TPR “always chases” automatic enrolment duties breach (1,240), late payment of contribution (371) and criminal breach (1) at times of changes to auto-enrolment.
Claire Carroll, partner at Eversheds Sutherland, said that in recent years, consolidation has seen schemes get bigger as smaller schemes are swallowed by master trusts.
She pointed out that section 72 requests have always been “a lot of work”, but for a large scheme carrying a lot of data facing a “kitchen sink” request from TPR, the ask is “significant”, especially when TPR also wants to investigate those in supply chain including, trustees, actuaries, lawyers, investment managers, accountants, and sponsors.
She said: “While the number of requests for this data might be lower, the workload could be significantly higher, with those receiving the request potentially having to gather data relating to schemes recently moved under their umbrella.”
Carroll said pension schemes and trustees should not, tehrefore, look at these numbers and think the regulator is making fewer requests than before.
“Our experience is that, once TPR has started making requests in relation to a particular scheme, there can be multiple requests over a long period of time before TPR gives any indication of what their enforcement case might look like, and whether and when it might proceed.”
Carroll added that schemes and trustees should look at these numbers in the context of consolidation and see that the regulator is committing to potentially major investigations over a lengthy period of time.
“With consistent levels of requests being made schemes will want to address their data infrastructure in case the regulator comes knocking and they have to pull together disparate data,” she noted.
However, the regulator stressed that it only seeks information where “reasonably required for an investigation and is proportionate for its scope”.
A spokesperson for TPR said: “The largest pension schemes are responsible for the pots of millions of savers. As we continue to move to a landscape of fewer, larger schemes it is right we use our powers to ensure we have the information necessary to protect those savers’ interests.”
The FOI submitted by Eversheds Sutherland sought data on TPRs information gathering powers since 2018, and the supplied information refers to the use of information gathering powers in auto-enrolment and frontline regulation directorates.
TPR pointed out investigations typically involve making enquiries to gather relevant information and evidence in a “reasonable, appropriate and proportionate way”. Information sought typically include information, documents and explanations under “reasonable” period of notice which varies in length depending on the anticipated volume, complexity and accessibility of information requested.
For auto-enrolment information gathering, TPR said its information gathering powers remained consistent over the past three years in numbers and in terms of the nature of the information requested.
It attributed the increase in section 72 requests for the last quarter of 2019 to a specific piece of work carried out response to market intelligence. TPR said that this saw it issue 300 section 72 requests.
In addition, TPR pointed out that during periods of COVID-related national lockdowns, it was unable to inspect businesses. This meant it issued a higher-than-average number of section 72 requests in 2020 to ensure it had the information it needed to protect savers.
It said that following the lifting of national movement restrictions our use of section 72 requests returned to their usual levels.
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