Nearly a fifth (17 per cent) of defined contribution (DC) pension schemes that The Pensions Regulator (TPR) engaged with as part of its drive on value have opted to wind up after concluding that their schemes do not offer good value, TPR has revealed.

TPR launched an initiative last year to check that savers in DC schemes are benefitting from rules requiring trustees to assess whether they deliver value through a detailed value for members (dVFM) assessment.

In an update on this work, TPR confirmed that 17 per cent of schemes it engaged with, having concluded that they do not offer good value, opted to wind up, suggesting that, if the results are reflected across the whole DC landscape, more than 200 schemes would be opting to wind up.

The update was released as part of TPR's latest compliance and enforcement bulletin, which showed that pension schemes have been fined a total of more than £30,000 as part of the regulator's efforts to ensure savers get value from their pensions.

According to the bulletin, TPR used its powers 10 times in relation to dVFM assessments between January and June 2024, issuing seven penalties, totalling £19,250, and three improvement notices.

Combined with penalties issued between November 2023 and January 2024, when TPR carried out a pilot exercise, total penalties for dVFM breaches have reached £33,750.

More schemes are also expected to be named as further penalties are issued or paid.

TPR interim executive director of regulatory compliance, Mel Charles, highlighted the penalities as demonstration of TPR's determination to ensure DC schemes deliver value for savers.

He continued: “Those that can’t meet our expectations should consider whether a transfer to a better-value scheme and winding up is in members’ best interests.

“Trustees can expect to see more penalties issued as we analyse data from scheme returns.

“The vast majority of schemes are complying with their climate reporting requirements, but we will continue to enforce where we identify failures.

"We are also increasing our focus on investment governance and trustees should expect to be challenged on whether their climate reporting disclosures are the product of strategic decision making aimed at protecting savers from the financial risks of climate change, both now and in the future.”

Indeed, TPR confirmed that it fined two pension schemes for failures relating to annual climate change reports, with GKN Group Pension Scheme and The Prudential Staff Pension Scheme fined £8,000 and £5,000 respectively.

The bulletin also provided an update on how many times TPR has used its wider powers to protect savers in the six months to June 2024, revealing that the use of auto-enrolment powers has remained broadly consistent.

In particular, TPR issued 30,688 Compliance Notices, compared to 29,489 in the previous period, and 18,589 Unpaid Contribution Notices compared to 17,451 in the previous period.

It also issued 20,677 Fixed Penalty Notices up from 19,538 in the previous period, and 7,682 Escalating Penalty Notices (EPN), up from 8,400 in the previous period.

Commenting on the figures, TPR interim joint director of automatic enrolment, Catherine Nicholson, said: “Millions of savers will depend on their workplace pension gained through AE for their retirement needs.

"To ensure they get the pension they are due, we first and foremost support employers to meet their AE duties, directly communicating with around 500,000 each year.

“However, for the minority who fail, we will, where necessary, use our powers to protect savers.

"Through the enforcement activity demonstrated in this bulletin and the support we provide, this period saw 97 per cent of employers pay their workers’ contributions in on time.”

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