The Pensions Regulator has published a new corporate strategy, setting out its priorities for the next 15 years.
Reflecting the changing nature of workplace pensions, this strategy outlines a shift in focus from DB to DC schemes, and a commitment to protect the financial wellbeing of savers in the years ahead.
The TPR says this publication builds on earlier work to transform to a “clean, quick and tough” regulator.
TPR chief executive Charles Counsell said that while support remains in place for pension schemes and employers in the wake of Covid-19, this must be underpinned by longer-term plans to protect savers.
This is a discussion paper and will be finalised in the new year after consultation with the industry and key stakeholders.
This strategy analyses different groups of savers by generation, recognising each faces specific pension challenges.
From this analysis five strategic priorities emerge:
- Security – protecting the money that savers invest in pensions. Maintaining focus on the promises that are made to savers in defined benefit schemes and on protecting their pensions from scammers; over the fifteen-year horizon of the strategy, as assets in defined contribution schemes grow, there will be a shift in primary focus to the security and value that these schemes provide savers.
- Value for money – savers’ money must be well-invested, costs and charges must be reasonable; and good quality, efficient services and administration are driven by robust data.
- Scrutiny of decision making – monitoring those who make decisions that impact savers’ outcomes, closely scrutinising any decisions that pose a heightened risk to the quality of these outcomes.
- Embracing innovation – encourage innovation and good practice, collaborating with the market to enhance security, efficiency, transparency, simplicity, and choice.
- Bold and innovative regulation – transforming the way TPR regulates to put the saver at the heart of its work, driving participation in pensions saving and enhancing and protecting savers’ outcomes; maintain a sharp focus on bold and innovative regulation, anticipating and preventing issues before they materialise.
Counsell adds: “In a rapidly evolving pensions world, it’s vital that as a regulator we anticipate the change that’s coming. That’s why today we’ve outlined our 15-year vision for the future, putting savers at the heart of everything we do as we cement our clearer, quicker and tougher approach.
“We are determined to do all we can to protect pensions savings, drive participation and enhance outcomes now and in the future.
“We will do what is necessary to support the industry through the current crisis and to recover strongly so that savers can enjoy a secure retirement.”
Isio partner Mike Smedley says: “It’s a brave step by the Pensions Regulator to look at the bigger picture and a world where DB pensions are less important to the majority. But this raises an existential question – in the long-term do we need a Pensions Regulator at all? Is it right to maintain the current patchwork of regulators rather than a holistic view of pensions and long-term savings? In a world of member-centric DC pensions, why regulate workplace and individual plans so differently?
“It’s also a huge leap of faith to assume that pensions will be the savings vehicle of choice for millennials. There are already signs of movement towards other long-term savings which will need a much broader response than the Pension Regulator’s current statutory remit.”
The People’s Pension director of strategy Phil Brown says: “We very much welcome the regulator’s new 15 year strategy – it’s a good plan and focuses on a new breed of retirement savers, the majority of whom have started saving since the dawn of auto-enrolment eight years ago. In focusing on this shift from defined benefit to defined contribution pensions, it correctly identifies the main challenges for each generation and income group. Putting the focus on these savers is key.
“This strategy recognises TPR is now regulating a commercial market as well as employers and trustees, operating single employer schemes. This is very much a strategy for the immediate future of pensions.”
Aegon head of pensions Kate Smith says: “The pensions market is evolving faster than ever and it’s important that savers’ financial well-being is put at the heart of this and how schemes are regulated. Both the Government and Pensions Regulator are pushing smaller schemes to consolidate to help improve member outcomes by giving them access to lower charges, greater investment choices, innovative ways of engaging with members and better value of money. It’s clear that master trusts will have a valuable role in helping people to save now and into the future. Fewer larger pension schemes will make it easier for the Pensions Regulator to keep closer to pension schemes as they become increasingly important to the UK in helping to generate better financial futures.”