The Pensions Regulator (TPR) has emphasised the need for a “shift in mindset” to deliver value for money for members, confirming plans to update its defined contribution (DC) guidance following recent government announcements.

In a blog post, TPR chief executive, Nausicaa Delfas, also confirmed plans to publish new guidance on investing in productive finance and update its existing investment guidance for defined benefit (DB) and DC schemes in “autumn”.

The blog was shared following the Chancellor's Mansion House speech, which included a number of reforms designed to boost pensions and increase investment in British businesses, suggesting that the DC reforms could increase a typical earner’s DC pot by 12 per cent.

Delfas welcomed the new package of measures, which included a number of consolidation proposals, arguing that ensuring value for members is best achieved by having “fewer, larger, well-run schemes”.

In particular, Delfas said that widening the opportunities for collective defined contribution (CDC) schemes and the introduction of a statutory regime for DB can help bring about schemes with better governance and scale to achieve good outcomes.

However, she stressed that, in addition to new models, there needs to be a "fundamental mindset shift" throughout the pensions industry, with the value for money framework set to enshrine this in legislation, driving effective competition on metrics that really matter for savers.

“Trustees need to make sure that savers’ money works for them. And that doesn’t mean avoiding risk but taking the appropriate level of risk to secure the right outcomes for their members,” she stated.

“In both DB and DC schemes, trustees have a duty to savers to act in their best interests. That means working hard to deliver the retirement income that savers expect, including properly considering the full range of investment options.

“Trustees should be conscious of and manage risks, but also take advantage of new opportunities – putting in place the right advisers and challenging them to present them with well thought out and innovative offers which enable them to invest in the interests of savers.”

Delfas also said that productive finance “of course” has a part to play in a diversified portfolio and new ways to access these opportunities are becoming available to trustees, such as Long-Term Asset Funds.

Given this, she confirmed that TPR will “soon” update its DC guidance to reflect new duties on
trustees to report on their policy on illiquid investments and to support trustees to make well-informed decisions.

In addition to this, she revealed that the regulator will provide new guidance on investing in productive finance and update our existing investment guidance for DB and DC schemes in "autumn".

Delfas suggested that the new DB funding code will also clarify where DB schemes are able to accommodate investment in growth assets, particularly for open and immature schemes.

“TPR’s core focus is on ensuring schemes are well run and have sufficient scale to deliver good outcomes for savers,” she continued.

“As a regulator, we will be scrutinising and challenging trustees on the decisions they are making and how they are designed to deliver the right retirement outcomes for savers.

“Where trustees do not have the scale, expertise, or appetite to meet our challenge and truly deliver for savers — then it is time to consolidate and move their savers into a scheme that can. Savers deserve nothing less.”

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