Under the current system, the Financial Conduct Authority, overseen by the Treasury, regulates contract-based personal pension products and pensions advice more generally. The Pensions Regulator, overseen by the Department for Works and Pensions, is responsible for trust-based occupational pensions and the role of trustees.
Under the current system, the Financial Conduct Authority, overseen by the Treasury, is responsible for trust-based personal pension products and pensions advice more generally. The Pensions Regulator, overseen by the Department for Works and Pensions, regulates contract-based occupational pensions and the role of trustees.
There has been criticism of potential overlap or, more worryingly, blind spots between the two bodies in light of a major programme of pension reforms over the past five years, culminating in the radical pension freedom reforms which come into force next month.
Earlier today, the parliamentary Work and Pensions Committee published its report into progress on auto-enrolment and pension reforms, in which it called for an independent commission to be established.
This commission would take an “evidence-based and inclusive approach to assessing the impacts of the recent pension reforms... and recommend further improvements where necessary”, and “provide coherence in pensions policy and... long-term stability in the system”.
Previously the National Association of Pension Funds, the International Longevity Centre and Royal London expressed support for an independent pension commission.
Malcolm McLean, senior consultant at provider Barnett Waddingham, said that a single regulator will provider a “clear focus” for direct action and “early intervention” when necessary.
“We are constantly hearing from either TPR or the FCA about the need to consult one another on a range of activities. This is not only inefficient it is positively dangerous.
“A single regulator would be less confusing for consumers, would help to plug gaps in the current arrangements and provide greater consistency of treatment between trust based and contract based schemes.
“Apart from anything else this would provide a breathing space after the recent upheavals and allow considered expert analysis of the workings of the massive changes brought in and the future direction of travel required.”
Jon Greer, pensions technical expert at Old Mutual Wealth, said: “An independent commission with the ability to oversee pension policy regardless of which flavour government is in place can play a valuable role in creating a period of much needed stability.”
The committee’s report also recommended that the proposed commission work with the new government following the general election in May to assess whether the protections for savers that have been put in place so far are adequate.
Yesterday, FTAdviser revealed that Old Mutual - potentially among others - is to produce extensive documentation setting out a wider list of questions and risks than the initial list suggested by the FCA when it finalised rules for so-called ‘second line of defence’ warnings.
Mr Greer said: “We think the FCA or independent commission should review each providers’ ‘second line of defence’ as a matter of urgency to help it develop a more robust set of rules for the industry.”
Graham Vidler, director of external affairs at the Napf, said that an independent commission would help make sure pensions policy is made in savers’ interests and for the long-term.
“We fully endorse the committee’s recommendation for in independent commission and echo its call that this be set up as soon as possible after the general election.”
David Sinclair, director of the International Longevity Centre, added that despite the “success” of auto-enrolment, the UK faces a “long term savings crisis” and the commission should address this.
“Raising savings levels in the current economic climate is a challenge in itself but it has been exacerbated by policy uncertainty.
“It is critical that whatever future steps are taken, they are well thought through, based on consultation with a variety of stakeholders and appropriately communicated to the general public.
donia.o’loughlin@ft.com
