The Pensions Regulator (TPR) has urged the industry to “grasp the opportunity” to make sure savers have a pension system fit for the future.

In a blog post, TPR chief executive, Nausicaa Delfas, said that it is “inescapable that pensions are at a moment of significant change”, suggesting that the industry is “in effect straddling two worlds, gradually moving from one to the other”.

“A past, where employees were promised a generous set income in retirement, and where employers bore the risk in making good on that promise. To a future, where many more people are saving for their retirements, but the risk is entirely on them,” she stated.

“A past where we had one employer, one scheme. And a future, where we have a marketplace competing for business. This requires schemes to operate differently and a different type of regulation.”

Delfas also reiterated the regulator’s support for the pension elements in the government’s Autumn Statement, arguing that the journey towards fewer, larger, well run pension schemes will help to deliver better outcomes for savers.

“Scale brings benefits,” she explained. “Not just in economic terms through the ability to invest in a broad range of diversified assets and drive cost efficiencies. But also significant enhancements to standards of governance and the potential ability for service innovation.”

In addition to this, she agreed that improvements are needed in the standards of trusteeship, pointing out that while most savers would expect that those governing their hard-earned savings were suitably qualified, analysis from TPR has shown that one in five trustees have never read one of its codes.

“Trustees have a fiduciary duty which contains valuable protections for pension savers including a duty to act in their best interests,” she stated. “We should not underestimate how powerful that is. But those trustees have to have the capability to really deliver good outcomes for savers.”

Delfas also expressed her support for the government’s plans around decumulation, acknowledging that many DC savers will be faced with incredibly complex choices about how to support themselves in retirement.

“The market needs to provide a suite of value for money products and services that work for different savers and different retirements. And we all need to work together to guide savers toward the right solutions for them,” she stated.

“That is why we support the government’s plans for all schemes to either offer or partner with providers who can help savers turn their pension pot into a retirement income and we will develop guidance to support trustees in achieving this.”

However, Delfas acknowledged that achieving the vision of fewer, larger, well-run schemes will also require changes in the regulatory approach.

She stated: “Ensuring compliance with the law remains fundamental, but we also have a role in broader market oversight, understanding market dynamics as a whole, sharing what good looks like, and fostering innovation in savers’ interests.

“That means working with the full extent of the pensions eco-system, not just those parts that fall under our regulatory remit. It means sharing information and working together with others in the regulatory family to come to joint solutions to ever more complex problems.

And it means harnessing the power of data and digital to really empower our pensions experts to assure that schemes always deliver for savers.

“It is incumbent on all of us to make sure they have a pension system fit for the future: change is coming, and we must all grasp the opportunity in savers’ interests.”

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