If only we had a TPR which was as interesting as Sarah Smart!

I was speaking yesterday with a journalist who is interested in the future of TPR and the rating I gave its current Chair Sarah Smart. Let me clarify, I think that Sarah has done all she could and for almost her full time in the job. My frustration for her is that she could not do more of what she set out to do at outset. I hope she will return to us and bring her experience with her so that we are the wiser for it.

If I could give a blogger of the month award, it would be to Pension Oldie. Here he is this week, speaking of Sarah and her task.

The problems with TPR arise from and can only be addressed by Parliament. After all TPR was set up specifically to protect the PPF and the pressures on TPR sometimes appear to come from ill informed politicians seeking to apportion blame elsewhere when something goes wrong. Would we have had the BHS scandal without the Pensions Act 2004? Would Liz Truss’ Government have fallen if pension schemes had not been required to think of in terms of gilt based valuations adapted from the Pensions Act 1995?

Sarah to me at great distance appears to have been a breath of fresh air, trying to set an objective oriented direction for the TPR away from the orthodoxies of the “pensions industry” and regulator group think. This may come from her background as I believe her first involvement with pensions was as a member nominated trustee. She appears to have been able to retain the mind set of an outsider looking in, despite all the pressures to be incorporated into the orthodoxies of the advisory and consultancy mindsets of trying to comply with existing structures and guidance.

She will be difficult to replace, but the Government and ultimately Parliament needs to consider what they want to achieve for pension provision and saving, and then put in place structures that provide the best prospect of success. That will require embracing new concepts and ideas and not always considering failures, which there will undoubtedly be. We need a pensions champion not a “regulator”.

I have pointed the journalist in the direction of some pretty exceptional people. I have pointed her to Pension Oldie though it will be for her to link his name on this with the real person.

Who does the TPR think it is?

TPR sets out its objectives on every press announcement it makes. Here they are (clipped from the announcement on Sarah Smart. It really is a boring parade which says nothing to pensions as a route to “growth”.

TPR is the regulator of work-based pension schemes in the UK. Its statutory objectives are to:

• • protect members’ benefits

  • reduce the risk of calls on the Pension Protection Fund (PPF)

  • promote, and to improve understanding of, the good administration of work-based pension schemes

  • maximise employer compliance with automatic enrolment duties

  • minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only)

Note “growth” is only mentioned as something that goes on elsewhere..

We should not forget that as well as presiding over the problems with DB, Sarah was in charge as the DC regimen took hold.  Only one of the objectives refers to the outstanding workplace development of the last ten years (auto-enrolment) which is a DC event (virtually exclusive).

What troubles me with this  is that almost everyone in the private sector has a pot from auto-enrolment and many have several pots. But I don’t see the Pensions Regulator making any mention of “wealth” or “pot” or “pathways” or any other jargon from the DC library. Are DC pots “pensions”- hasn’t TPR thought solving this question an objective – it’s what I do as a 63 year old with a couple of pots?

Here I think the Pensions Regulator is losing and will lose big time as time goes by. Because the point of a pension is that it gives value for money over the longer term. These objectives simply don’t address the world of DC savers wanting a pension.

Whereas a pot is mysterious and fun and comforting from 55, a pension is something that pays when you are older and doesn’t stop paying till you (and perhaps your partner) do.

All this DC saving is leading us not to pensions but to annuities and drawdown and cash. For the poorest cash can be best (see another blog today), for the richest, wealth management offers chances to defer or drawdown (though this is becoming tougher after IHT advantages go in 2027). But for those in the middle, the people who need to top up their state pensions, there is little by way of a pension option from all this DC saving.

I hope that we will do something about this. CDC is one way of offering people certainty and the value of investment. DB can do the same and we may see a return of standalone defined benefit pensions which people can convert their DC pots to.

The dashboard will give people visibility of the mess that DC savings leaves them in and maybe we will see the Pension Regulator will act under its objectives

• protect members’ benefits

• promote, and .. improve understanding of, the good administration of work-based pension schemes

But to be honest, these are pretty weak objectives when you consider the aspirations people have for the later stages of their lives.

Maybe the problem starts and ends in the TPR’s objectives being so bloody boring. Sarah wasn’t and isn’t boring. She’s swimming against the tide. As Pension Oldie says, the next Chair needs a Government that is interested in what Sarah was and is – GROWTH.

Growth is not boring, it is an interesting objective which the Pension Regulator should adopt.

Sarah can do a lot more outside TPR than she can in. I hope we see a lot of her!