Embracing the changes to come

Pensions Dashboards update

David Fairs , Executive Director for Regulatory Policy, Analysis and Advice, sets out TPR’s key priorities in a challenging landscape.

We are continuing to support trustees, employers and savers through the economic uncertainty caused by the pandemic, and our recently published Corporate Plan sets out our key priorities for the year ahead.  

The priorities, which are grounded in putting the saver at the heart of what we do, include implementing the Pension Schemes Act, combatting scams, and developing a framework for measuring value for money.

The plan shows how we will deliver against all five strategic priorities, as outlined in our long-term Corporate Strategy which sets out our blueprint for the future of pension regulation, and build on the work we have done in recent years to be a clear, quick and tough regulator.  

The landscape ahead is both exciting and challenging and we are determined to embrace the changes to come. These include the ongoing shift to defined contribution (DC) saving and market consolidation, the emergence of new technologies, and the impact of climate change on trustee and employer decision-making. 

The plan also sets out how our work will be measured. For the year ahead, we have set ourselves 15 key performance indicators that are a mixture of quantitative-, milestone- and progress-based measures. 

Trustees: be alert and act quickly 

We also recently published our Annual Funding Statement (AFS), which calls on pension schemes to remain alert to the risk of weakening employer covenants and act quickly where needed to protect savers. 

We know many employers and trustees have worked together to maintain their funding commitments; however, there is still uncertainty in the market due to pressures including the COVID-19 pandemic and Brexit. This means trustees should remain vigilant and take swift action where necessary. 

When carrying out actuarial valuation, trustees should review how their covenant may have changed in the past year and then continue to monitor it. We expect trustees to remain engaged with employers who, in many cases, are emerging from a difficult business period.

The AFS, which is particularly useful for schemes with valuation dates between September 2020 and September 2021, shows that this tranche has remained buoyant despite difficult market conditions for sponsoring employers. Many businesses will have benefited from extended government support, and while it is too early to tell if we will see a rise in company insolvencies, uncertainty remains. If there is a prospect of insolvency or a restructure of scheme employers, we want trustees to probe the covenant even further, taking professional advice if needed to gain a fresh view on covenant strength to ensure their scheme is being treated fairly.

Improving the consumer pensions journey 

This spring also saw TPR, together with the Financial Conduct Authority, launch a new call for input asking the pensions industry how consumers make decisions about their pension at key points throughout their working lives.

Since automatic enrolment started in 2012 there has been a seismic shift in the pensions landscape, with 15 times as many savers in defined contribution schemes than in accumulation within defined benefit schemes.

This shift means savers carry more of the risk in planning for their retirement and have more decisions to make than ever before.

When thinking about a pension, there will be decisions savers make, actively or passively, at different stages of their lives. These include starting a pension, building up funds, approaching retirement, accessing their pension, and finally spending their pension savings.

The newly launched call for input seeks to gather information on what influences consumers across this journey and find out how they can be better supported to achieve improved pensions outcomes.

The views gathered will inform policymaking and will be used to target any future regulatory interventions at areas of greatest benefit to savers. 

Those with insights into any of the questions asked should respond by emailing [email protected] before 30 June 2021. 

The PLSA will be responding to the call for input on behalf of our members. If you would like to contribute your views to our response, please contact [email protected]