TPR to take tougher approach on employers that do not take pensions seriously

increase spending

The Pensions Regulator (TPR) has published its corporate plan for 2018 to 2021, in which it has stated its aim to take a tougher approach regarding employers that are not taking pension schemes seriously, as well as introducing a new anti-scams campaign to help savers.

TPR will also work alongside those organisations that are working to deal with pension schemes correctly, and with trustees to improve scheme governance.

The regulator has outlined its priorities for the coming three years, which include: promoting good trusteeship through improving governance and administration; effective regulation of defined benefit (DB) pension schemes and master trusts; preparing for the impact of Brexit; and ensuring employers meet ongoing auto-enrolment duties.

To help it achieve this, TPR will increase spending on resources to protect pension savers by 5.2% in 2018/19. This will be an additional £4.3 million on top of that spent in 2017/18.

The regulator attributes this to an additional £5.9 million in salary costs due to growing headcount, £1.8 million in non-payroll staff-related costs, an additional £1 million communications spend, and £500,000 in general other costs.

These are offset by a projected reduction in contractual costs (£4.3 million) due to the completion of the roll-out of automatic-enrolment, and a reduced call on consultancy services (£600,000).

During the year, TPR plans to increase its headcount by 12%. Just over a third (34%) of the overall headcount will be allocated to its frontline regulation team, 16% will be focused on auto-enrolment, and 20% will be dedicated to policy and advisory work.

Kate Smith, head of pensions at Aegon, said: “As the pension market evolves, [TPR’s] focus and remit has to keep up with these changes. With new regulations and powers, [TPR] is gradually changing its focus to one more of compliance and supervision, adopting the [Financial Conduct Authority’s] approach. Bolstering its frontline staff with over half involved in trying to achieve better regulatory outcomes demonstrates increasing commitment to protect individuals’ pensions. The announcement that the regulator will be applying to the courts to seize assets where employers have failed to pay regulatory fines shows just how seriously it takes this.

“Rules are being tightened and the regulator is demonstrating it isn’t afraid of using its powers to be quicker and smarter in the way it protects pensions. Inevitably, this will lead to higher regulatory costs both for the regulator and sponsors. [TPR] is getting tougher, but the consequence of this is that pensions become safer, leading, in turn, to greater confidence and trust in pensions.”

Kim Gubler, deputy chair of the Pensions Administration Standards Association (PASA), added: “We were pleased to see improved governance and administration listed as one of TPR’s key aims over the next three years. This increased regulatory gaze, particularly relating to ‘high risk’ schemes, is extremely encouraging.

“Prevention is better than cure and we look forward to working with the regulator on ways to evidence good practices, not just highlight the bad. Collaboration will help promote more effective and proportionate regulation across the entire administration arena.”