“Making workplace pensions work” – the Pension Regulator’s new approach

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New livery – new approach

I’ve been on the Pensions Regulator’s stakeholder panel a couple of years and this gets me a ticket to their Annual Conference. I haven’t bought the new vision in previous years, but yesterday’s event, held in County Hall, pushed the right buttons. The TPR Future Program is what a quicker more proactive and tougher regulator should do, I give it a thumbs up; though I’m far from certain it will deliver the protection it promises to members.

£34.6bn left DB plans to uncertain destinations last year, the masthead of this blog reminds us that over £3bn of that amount left BSPS – much from Port Talbot steelworkers.

You can read the document “Making workplace pensions work” here.


First my concerns

My doubts focus on the yawning gap between the FCA’s supervisory approach, focussing on providers and the tPR’s risk-based approach , focussing on schemes. Where the FCA has its focus on member outcomes, the Pensions Regulator focusses on trustees, employers and (to some extent) advisers. You might see these as complimentary, I see the gap.

I saw the gap in yesterday’s discussion of scheme consolidation. It is one thing to focus on benefits of economies of scale, it is another to ignore “member detriment”. The concept of “homogenisation” was bandied about. If you were cream – would you want to be homogenised with skimmed milk to make a more marketable product?

The first of TPR’s statutory objectives is to Protect the benefits of occupational pension schemes. Homogenisation does not sit well with that objective. Dumbing down of benefits to meet the commercial needs of superfunds , employers and to protect the PPF- cannot be achieved at the expense of member benefits. A  transfer resulting in a marginal improvement on PPF benefits (with a weaker provider covenant) , “protecting member benefits”.

Second , my applause

The re-branding of the Pensions Regulator to “TPR” will save my fingers a lot of typing. The new logo and font are simpler and more focussed. While this may seem cosmetic, it is more than that, it is worth looking good if you have an image problem. Carillion, BHS and  USS, have given tPR an image problem, something had to change – it has.

Sadly, one thing that shouldn’t have changed, the incumbent CEO- Lesley Titcomb, will change. Though we still have 6 months of Titcomb, she will be missed. TPR Chair Mark Boyle reminded me after that it is the team that counts, it’s the leader of the team that counts the most – Lesley Titcomb will be hard to replace. My applause to her.

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I’m really pleased with the new team – nonetheless. Nicola Parish is not to be messed with, David Fairs is authoritative and personable, Liz Hickey is as good a communicator as her demanding post requires, Mark Birch is solid ( a rock in a hard place). I am pleased that Jo Hill is joining in November, she will bring a capacity to analyse and use the Pensions Regulator’s data-set, something which has not happened enough to date.

So what’s new?

The new regulatory model has emerged through the TPR Future programme, the new operating model that fulfils regulation will – according to TPR

“cover all operations- defined benefit, master trusts and other DC schemes, auto-enrolment and public service schemes”

What is new is that big schemes (the 25 biggest according to FT, 60 biggest according to NMA) will get one to one supervision – effectively their own TPR account manager, the smallest schemes (mainly the 30,000 of so EPPs and SSAS’) will get not much more than statistical oversight. Whether one to one is done purely on scale or on a risk and scale assessment is unclear – my impression was that risk was part of the selection process. Risk selection is more sensible in terms of targeting problems, though it would be hard for a risk-selected scheme to avoid being labelled in “special measures).

Regulatory focus on small schemes will be targeted on those most likely to fail their members. Here – the digital skills of Jo Hill should make a difference. The scheme returns are digital, the auto-enrolment team has long used digital RTI to identify potential failures, this is surely the way forward for TPR’s small schemes approach (whether DB or DC). TPR call this “horizon scanning”.

Here the question of consolidation becomes relevant. “Comply and explain” (if you don’t) , should be the mantra for the small schemes unit. But TPR need a clear policy on “destination”, (as Pete Glancy of Scottish Widows pointed out). It is not good enough to drive small schemes out of the frying pan into the fire.

Other “news” is the announcement of a new “test and learn” online guidance service – to help 21st Century Trustees.

Standards of what “good looks like” will be implemented. TPR acknowledged yesterday that there may in the past have been an over-emphasis on “bad” – it’s good to see the bar for good practice being more precisely set.

The Auto-Enrolment escalating penalties model, will become common in other areas of TPR enforcement

“We will drive compliance through a process of systematic and escalating interventions with those we regulate …we will intervene and take appropriate enforcement action”.

When’s this happening?

TPR say that all this change is happening now. Horizon scanning’s going on today, the “one on one” large scheme initiative will begin in October. Work in progress includes oversight of the ASDA/Sainsbury merger (and Whitbread’s sale of Costa to Coke- not mentioned yesterday). Recent successes cited include work with GKN and Melrose.

By and large, I am with TPR, it is doing a good job with DB plans going through changing sponsors. My one reservation is that tPR currently do not recognise the DC deficits, such as those in the Whitbread pension scheme resulting from low income members missing out on tax relief (AKA the Government incentive).

If the Pensions Regulator is to be taken seriously in meeting its statutory object to protect members, it must require occupational DC schemes – whether master trusts or single employer schemes (like Whitbread’s) to make good the individual DC deficits – before clearance is given on deals.

Currently TPR think I am joking – I am not. This focus on small DC pots needs to happen now.

A clean bill of health?

Well almost – I still don’t see why FCA/TPR are so distant – geographically and in tone and culture. I still think that having two regulators causes an artificial divide between retail and institutional and that that divide is pernicious both to regulation and pensions.

In the long term- I want one pensions regulator – whether based in Brighton or Stratford and I want that regulator as good at regulating macro – as TPR and as good at regulating micro – as FCA.

Till that happy day, I am pleased to see TPR making progress, but warn it against complacency. It is still not protecting members as it should and – if TPR are reading this, I will not be shutting up about the net-pay scandal or the other issues mentioned above – where member interest are in peril.

making workplace pensions work

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About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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