Whilst the number of Section 72 requests from The Pensions Regulator (TPR) has fallen, the increasing size of schemes means these requests are more difficult, invasive and expensive for schemes than ever before, Eversheds Sutherland has warned.

A Freedom of Information (FOI) request from Eversheds Sutherland revealed that Section 72 frontline regulation requests, which are used to request information from pension schemes if the regulator suspects wrongdoing, had fallen from a peak of 49 in Q4 2018 to 11 in Q4 2023.

The FOI also included specific details on TPR's recent Section 72 auto-enrolment requests, revealing that TPR made 1,240 requests in relation to an auto-enrolment breach, 371 requests issued in relation to late payments, and 1 request in relation to a criminal breach.

Commenting on the findings, Eversheds Sutherland partner, Claire Carroll, said: “In recent years, consolidation has seen schemes get bigger as smaller schemes are swallowed by master trusts.

"Section 72 requests have always been a lot of work, but for a large scheme carrying a lot of data facing a ‘kitchen sink’ request from TPR, the ask is significant. And the regulator also wants to investigate those in the supply chain. A domino effect is being created."

Carroll also emphasised that trustees, actuaries, lawyers, investment managers, accountants, sponsors can all be brought into the request, arguing that while the number of requests may have fallen, the amount of work involved in meeting these has increased significantly.

She continued: "A data chasing exercise begins so while the number of requests in this data might be lower, the workload could be significantly higher, with those receiving the request potentially having to gather data relating to schemes recently moved under their umbrella.

“Pension schemes and trustees should not look at these numbers and think that the regulator is making fewer requests than before.

“Our experience is that, once TPR has started making requests in relation to a particular scheme, there can be multiple requests over a long period of time before TPR gives any indication of what their enforcement case might look like, and whether and when it might proceed."

Given this, Carroll said that schemes and trustees should look at these numbers in the context of consolidation and "see that the regulator is committing to potentially major investigations over a lengthy period of time".

"With consistent levels of requests being made schemes will want to address their data infrastructure in case the regulator comes knocking and they have to pull together disparate data," she added.

Commenting in response, a spokesperson for TPR said: “We only seek information where reasonably required for an investigation and is proportionate to its scope.

“The largest pension schemes are responsible for the pots of millions of savers. As we continue to move to a landscape of fewer, larger schemes it is right we use our powers to ensure we have the information necessary to protect those savers’ interests.”

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