The Pensions Regulator (TPR) will take action against those pension schemes failing to meet its expectations, TPR chief executive, Nausicaa Delfas, has said, with further details on a number of initiatives expected soon.

Speaking at the PLSA Annual Conference 2023, Delfas explained that while the regulator has previously taken an educational approach, it will look to take a more assertive approach with those schemes failing to meet its value for money expectations.

She stated: "To help shape the market towards fewer, larger well-run schemes, we too must change. As a regulator, we must use our powers effectively to drive high compliance and meaningful behaviour change amongst trustees.

“We must influence ever greater outcomes by being truly data-led and digitally enabled. Acting on enhanced insights about the state of the markets to anticipate the threats and opportunities to come.

“And we must innovate by thinking creatively about our regulatory approach, extending our reach to work with the actors in industry whose influence goes market-wide.

“In terms of our powers, historically our focus has been on guiding schemes and employers towards compliance.

“Now with clearer expectations, we will be more assertive, testing our powers to ensure savers are protected.

“For example, we have launched a regulatory initiative to make sure that schemes with assets under £100m are complying with their enhanced value for member assessments.

“Our initial findings show that some are already deciding they are not offering value for money and plan to wind up. But some are failing to act in savers interests.

“In the past, we might have sought to educate these trustees. No more.

“Now our focus will be on taking regulatory action to help drive consolidation in savers interests, testing the full suite of powers available to us to really change behaviour.”

Delfas also confirmed that the regulator will be issuing details of the action its taking as part of that initiative “shortly”.

To support efforts to become more data-led, Delfas also confirmed that TPR will be looking to go “beyond basic compliance and influence the market for greater, safer outcomes”, with a new digital and data strategy set to launch “soon”.

“We have bolstered our investment specialism, hiring respected experts from industry and we will soon launch a new digital and data strategy outlining our future transformation,” she continued.

“Across all scheme types, we will not only require you to disclose more information about your scheme, but to also analyse and interpret and act to spot and mitigate risks before they materialise.

“We all need to work together to harness the powers of data and digital so we can act quickly and spot potential risks and threats across the whole system and react accordingly.

"We will need lots of information from you to enable us to do this and we want to make it as easy as possible for you to give us this data, but we do expect you to have it and to be able to assimilate it quickly and easily.”

Delfas suggested that the value for money framework (VFM) will be “fundamental” to this for defined contribution (DC) schemes, explaining that "access to standardised objective data on scheme, performance and the laser-like focus on value will evolve [TPR’s] regulatory and supervisory approach”.

The Defined Benefit (DB) Funding Code will also aid in these efforts, according to Delfas, who argued that this will provide schemes with the continued flexibility around funding to suit their circumstances, whilst requiring trustees to think carefully about risk management in a complex economic environment.

"Contrary to some perceptions, the framework allows all schemes to invest in growth assets with much greater flexibility to open schemes and those further away from their endgame,” she clarified.

“The code, which we acknowledge has taken longer than anticipated due to the parliamentary process, not only sets out our expectations clearly to the market, but also changes the game in terms of the volume and type of data that we as a regulator can analyse to ensure savers interests are protected.

“This will give us not only detailed information on schemes, but also build our understanding on a market wide level. This information will help us better identify systemic risk, reflecting the fundamental role that the pension system plays in overall financial stability.”

Delfas also confirmed that while the timing for the General Code and DB Funding Code is somewhat dependent on the parliamentary timetable, TPR hopes to publish both “soon”.

Share Story: