Government proposals to strengthen pensions regulator don't make the grade, says ICAS
The ICAS Pensions Panel responds to proposals for strengthening TPR.
The DWP has proposed measures to strengthen The Pensions Regulator as part of a programme of reforms designed to protect Defined Benefit (DB) pension schemes and to improve the way the DB sector works.
The ICAS Pensions Panel has responded to the DWP’s consultation and stated that more comprehensive change is needed at The Pensions Regulator, before measures to strengthen it are introduced.
For example, earlier and deeper engagement by TPR with schemes and employers is needed more generally to head off crises.
Commenting on the proposals Christine Scott, Head of Pensions at ICAS said: “TPR should focus on improving the funding position of schemes generally, not just those with a weak employer covenant.
“This would protect schemes by reducing their reliance on the employer by moving them towards self-sufficiency and, where appropriate, to buy out.”
The Pensions Panel response suggests that a more collaborative approach towards engagement with sponsoring employers could improve the way TPR is perceived and would make it a more ‘open door’ regulator.
“A more fundamental review of TPR’s statutory objectives, operations, funding, staffing and skills needs would be required to achieve a collaborative approach.
“Any change of approach towards engagement would have to be embedded across TPR’s operations,” explained Christine.
Changes to notifiable events framework and declarations of intent
“In the response, the Pensions Panel states its concern that proposals for a more robust notifiable events framework and more onerous requirements around declarations of intent may not strike an appropriate balance between protecting pension schemes and the legitimate conduct of business.
“It is vital that any new measures should be proportionate and should not curtail unnecessarily corporate activity in the UK.
“TPR should be resourced sufficiently to ensure that its oversight of corporate transactions does not interfere with the planned timetable for transactions to take place.
“The proposed changes are likely to impact on people who may not understand their obligations or their exposure, so TPR needs to have an effective communication and education strategy to accompany any new requirements and sanctions.
“This should include fostering a common understanding with those who have to comply with tougher reporting requirements, for example when an event needs to be notified or a declaration of intent needs to be made,” said Christine.
In March 2018, the DWP published its DB White Paper setting out its plans for reform across three main themes:
1. Protecting private pensions through a stronger pensions regulator by:
2. Improving how the system works, in relation to scheme funding, by:
3. Improving how the system works, in relation to scheme consolidation, by: