The Pensions Regulator has published its latest three-year plan, an agenda encompassing everything from pensions security, tackling scams, dashboards, and coping with the changing nature of defined contribution pension provision.
In its foreword to the plan, TPR chief executive Charles Counsell and newly appointed chairwoman Sarah Smart explain that the regulator’s plans have been drawn up in reference to the continued fallout from the Covid-19 pandemic, as well as the changes to the pensions landscape brought by the Pension Schemes Act.
“Every aspect of our work has been impacted by the pandemic. For savers, employment has been affected and much uncertainty remains,” they wrote.
“Many employers are facing challenging economic circumstances and some schemes are in vulnerable financial positions. Our current focus on defined benefit funding in the wake of the pandemic will be maintained, and we will flex our resource to accommodate work with a greater number of distressed employers, where needed.”
Attention will also be paid to ensuring members of auto-enrolment schemes feel secure in their pension provision, they said.
“While most members of DC schemes have long investment horizons, there remains the risk in this uncertain time that shorter-term volatility may impact savers through reactive investment decisions, deciding to opt out or becoming more susceptible to scams promising better returns,” Counsell and Smart wrote.
“We expect trustees to review with their advisers what actions (if any) might be necessary to take for their schemes and savers.”
Year one: new powers, scams, dashboards...
The report separates TPR’s priorities into five categories, and then splits its plan between measures to be implemented in year one, and those to be implemented in years two and three.
The five categories are ‘security’, including things such as supervision, tackling scams, auto-enrolment and DC provision; ‘value for money’, which covers the introduction of cross-industry standards and benchmarks; ‘scrutiny of decision-making’ by employers, especially in the DB landscape; ‘innovation’, which encompasses superfunds, and dashboards; and ‘bold and effective regulation’, focusing on TPR’s “major change programmes”.
In the first year of its plan, TPR will focus on defining, refining and implementing the controversial new powers afforded it by the Pension Schemes Act, while its supervision team “will start work on an outreach programme with administrators, maintaining a focus on effective governance, administration and scheme funding”, the report stated.
TPR anticipates “an increase in the need for engagement and oversight of schemes via trustees with sponsoring employers who may be experiencing financial distress and complex decisions”, not least due to the after-effects of the pandemic.
“As a result, with finite resource, other supervision work may need to become leaner and more focused where possible.”
Year one will also see work done with Project Bloom “to deliver a more focused and joined-up approach to tackle pension scams”.
Under “innovation”, TPR’s plans include the continuance of its preparations for the pensions dashboards.
“We will support the [Department for Work and Pensions] in establishing the policy and legislative framework, define the principles for our operational approach, and commence the design work. We will work with the [Pensions Dashboards Programme] to develop the technological framework and align our communications strategy with the PDP and the [Financial Conduct Authority],” the report stated.
Years two and three: cyber security, DB funding code, CDC
Much of the work earmarked for years two and three is a continuation of that begun in year one, but there are also a number of new areas.
TPR will “take a more active role” in years two and three in “helping the market understand and tackle cyber risks”.
The new DB funding code is still to be expected in 2022, while TPR will expand its work with superfunds to accommodate “other innovative DB models” that might emerge.
The Pension Schemes Act made provisions for the emergence of collective defined contribution schemes, and TPR “will have a key role in respect of CDC schemes by authorising and supervising entrants to the market”, the report stated.
Counsell said the plan “reflects the commitments made in our long-term strategy and builds on the work we have done in recent years to be a clear, quick and tough regulator”.
“The landscape ahead is both exciting and challenging and we are determined to embrace ever more change: from the ongoing shift to DC saving and market consolidation, to the emergence of new technologies and the impact of climate change on trustee and employer decision-making,” he said.
TPR comes in under budget
The corporate plan also contains the regulator’s financial results for 2020-21. It spent £102.5m over the course of the year, £2m below the budget agreed with the DWP.
The decrease is largely accounted for by lower publicity and project expenditures, though these were partly offset by increased regulatory case expenditure.
TPR’s budget for 2021-22 is £6.7m higher compared with the full-year spend for 2020-21, largely to account for the cost of the auto-enrolment transformation programme, which will see the regulator embark on a period of insourcing.
Benjamin Mercer is a reporter at FTAdviser's sister publication Pensions Expert
