The Pensions Regulator (TPR) will monitor workplace pension schemes more closely from next month, as part of a shift in its approach to protect savers.
Under a new supervision regime it will work proactively with more pension schemes through a range of interventions to address risks sooner, clearly set out its expectations, and take action where necessary.
Dedicated, one-to-one supervision will be introduced for 25 of the biggest defined contribution (DC), defined benefit (DB) and public service pension schemes. This approach will then be rolled out to more than 60 schemes over the next year.
The aim is to build relationships with schemes whose size means they are strategically important regardless of whether they trigger TPR’s traditional risk indicators, the regulator explained.
TPR will maintain ongoing contact with these schemes and in some cases their sponsoring employers, reflecting their importance within the pensions landscape.
In addition, higher volume supervisory approaches will be introduced to address risks and influence behaviours in a broader group of schemes.
This will be piloted with approximately 50 DB schemes to assess compliance with messages in TPR’s 2018 annual funding statement, specifically concerning whether schemes are being treated fairly when it comes to dividend payments to shareholders.
Over time, hundreds of schemes are expected to see higher volume supervisory approaches to tackle different risks across the pensions landscape.
"Following a complete review of our entire approach to regulation, we are now implementing a radical shake-up of the way we regulate to embed our pledge to be clearer, quicker and tougher," said TPR chief executive Lesley Titcomb.
"Schemes across all sectors, whatever their size, can expect the volume and frequency of their interactions with us to increase so that potential risks to pension savers are identified early and put right before it becomes necessary for us to use the full force of our enforcement powers.”
The new model is flexible, adopting a “systematic approach” to set out expectations and will respond rapidly to emerging risks, taking hard action when required to tackle “bad behaviour”, including by corporate entities.
A crucial aspect of the new approach will be the use of a wider range of communication channels to “drive behavioural change by promoting greater understanding of what schemes need to do in order to comply with the law and demonstrate high standards”. This was a “vital ingredient” in the positive outcome of automatic enrolment amongst employers and Titcomb notes that they “look forward to developing a closer relationship with schemes, both large and small."