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TPR warns of tougher stance under new ECR

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  • TPR warns of tougher stance under new ECR

UK - The Pensions Regulator (TPR) has warned the pension industry it will "see a very different regulator" once it implements the Employer Compliance Regime (ECR) for the 2012 pension reforms.

Speaking at the National Association of Pension Funds (NAPF) seminar on 'The 2012 Pension Reforms - In Depth', Graham Brammer, ECR executive director at TPR, said the over-arching principle will be to focus on "educating and enabling" employers to meet the new duties of auto-enrolment from October 2012.

He said the plan is for the regime to be risk-based like its existing approach to regulating occupational schemes, however TPR claimed it would take enforcement action where necessary.

Brammer added the non-compliance section would be very rules-based and may "look similar to the HMRC regime" as he warned the regulator will become tougher.

He told attendees: "Currently, we operate in an industry where giving notice that we are preparing to use our powers is usually sufficient to make people comply. That won't work in the wider market, so you will see a very different regulator."

However, Brammer admitted TPR does not have the "brand resonance" of an organisation such as HM Revenue & Customs (HMRC), so it is working with communication and brand advisers to try and gain that type of recognition to ensure employers take TPR and its powers seriously.

TPR also confirmed enforcement of the regime would be 'data-driven' using multiple sources including whistle-blowing reports and the HMRC database, as with this approach "you don't need large numbers of staff [to visit employers] you just need highly sophisticated software".

The regulator intends to outsource the delivery of the compliance model in an effort to leverage existing infrastructure, as this would be "cheaper than building it ourselves", but warned that TPR is focused on the costs of the quotes to ensure work is not passed back to TPR or pushed onto the pension industry to keep the potential providers' bids low.

He added: "We absolutely don't want a partner with a really cheap deal, but actually everybody in the room will have to build lots of complicated things to make it work."

It is expected the provider will be appointed by 31 March 2010, however Brammer reassured attendees the new compliance regime would not be funded by levies but by 'grant-in-aid' from the government. (See earlier IPE article: TPR seeks support for employer compliance)

Meanwhile, figures from TPR's annual report and accounts for 2008-09 revealed the number of initial clearance enquires from employers fell from 494 to 291 over the year, while the number of applications granted more than halved from 143 to 68.

The report noted: " The level of clearance activity has continued on a downward trend. We believe that a significant factor here is increasing industry understanding of our requirements as well as declining merger and acquisition activity," although it admitted there was a "marked increase in complexity in the cases brought to us".

Other findings from the report revealed at 31 March 2009 there were 8.6 million members of private sector occupational DB schemes and 1.54 million in private sector occupational trust-based DC schemes, while a further 6.62 million are members of hybrid schemes.

It also noted 99.8% of pension funds completed the annual scheme return by the deadline of 31 March, allowing the Pension Protection Fund (PPF) to calculate its risk based levy, while TPR received more than 1,800 recovery plans following triennial valuations.

The report also showed TPR received 4,874 reports of late and non-payment of pension contributions to both personal and occupational schemes, resulting in the recovery of £174,000 in outstanding contributions, while it received 532 whistleblower reports, slightly higher than the 513 recorded in 2007-08.

David Norgrove, chairman of TPR, said: "Building on the progress of this year, we will accelerate our work towards maximising employer compliance with the new duties under the Pensions Act 2008."

"Our aim is to make it as easy as possible for employers to comply, and to ensure our powers, approach and framework continue to evolve with the market to protect member benefits for the long-term," he added.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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