The Pensions Regulator (TPR) chief executive, Nausicaa Delfas, has called on the pensions industry to seize the opportunity presented by the Pension Schemes Bill to raise standards and deliver better outcomes for savers.

In a blog post, Delfas examined the impact of the Pension Schemes Bill, announced last week, as well as how the regulator is working to address unfinished business in the pensions system and why the industry must push for ever higher standards to help unlock transformational opportunities.

Delfas said that some of the language used to describe the potential impact of the Pension Schemes Bill has included words like “transformative”, “a game-changer”, “once in a generation opportunity”, and “pivotal”.

She noted that the bill promises to be the “most significant moment” for pensions since automatic enrolment (AE) began a "revolution in saving" in 2012, suggesting that TPR “looks forward to the next stage” of the Pensions Review and it what it means for the adequacy of saving.

However, Delfas warned that the “central challenge remains - how do we build on the success of AE to ensure that our system really delivers value for money right across the savings journey, and through retirement?”

She emphasised the "very real risk" that millions of people with defined contribution (DC) pensions will not have enough to support themselves in later life and even if they do, without support, they risk losing much of their hard-saved money by taking the wrong decumulation option for them.

Therefore, Delfas said it was “clear” that the UK pension system is unfinished business, but the bill gives the industry all the chance to change that.

“Its reforms will help with consolidation and value to deliver greater returns, and the guided retirement duty will help complete the picture with default solutions and services at retirement,” she continued.

“It’s an important time for us at TPR, and for everyone involved in pensions. It’s time for the pensions sector to really raise its game and deliver for savers.

“And it’s why TPR is transforming into a market-facing, prudential-style regulator, delivering meaningful initiatives that protect savers.

“For many years, we have been building a vision for how pensions can and should secure better retirements. We now have all the pieces of the jigsaw to make that vision a reality.”

However, Delfas argued that this is not just a revolution in DC as never before has there been so much choice for defined benefit (DB) schemes.

“Much has been said already about the bill’s provisions for DB pension schemes to release surplus funds, to support employers’ investment plans and benefit scheme members,” she noted.

“We see the potential for these funds to be invested into the UK economy, supporting infrastructure, housing, and clean energy projects.”

She reassured the industry that TPR is not deaf to warnings that inappropriate surplus release could put retirees’ savings at risk, pointing to TPR’s guidance for trustees and employers as a response to this.

Delfas explained that this guidance seeks to help the industry consider the range of new models and options available and to highlight the questions trustees should be asking themselves.

The regulator expects DB trustees to have plans ready for how they would respond to sponsoring employers’ requests to release some of their scheme’s surplus and take advice and undertake an appropriate level of due diligence.

“As an industry, we are at a pivotal juncture, with the opportunity to utilise data and new technology, and to approach things in a different way to really deliver for savers,” Delfas said.  
In response to this, she said TPR had launched its innovation support service, aimed at encouraging “early conversations” with industry, to debate “great new ideas” from the ground up when they are in savers’ interests.

Delfas noted that in collaboration with industry, the service will strive to reduce unnecessary regulatory barriers to pensions innovation.

However, she said that with “bold new legislation” comes ever greater responsibility for trustees, advisers and administrators, suggesting that these decisions have an "enormous" impact on the financial wellbeing of millions of savers.

Therefore, as the system grows and evolves, Delfas said, so must the nature of trusteeship as what worked in the past may not work in the future.

To address these challenges, TPR intends to launch a new strategy aimed at bringing trusteeship into line with other professions and corporate governance standards.

Delfas set out five key traits she believes are “central” to good trusteeship, including being saver outcome-focused, capable of constructively challenging to avoid groupthink, highly skilled and diligent, agile and responsive, collaborative but accountable and data-led.

“TPR is transforming to meet the needs of savers. We are on the right path to ensure the Pension Schemes Bill will be the defining moment it promises to be,” she concluded.

“But everyone working in the pensions industry needs to be thinking now about their own role in making these reforms a success.

“The industry needs to adapt, evolve, rethink what it means to be a trustee, an administrator, an advisor.

“I am confident we will work together to complete the jigsaw and turn a vision of better outcomes for pension savers into a clear reality.”

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