In the white paper on defined benefit (DB) pensions published earlier this week, the government proposes a number of new powers for The Pensions Regulator (TPR), even though TPR has hardly scratched the surface of its existing powers. This is partly because it is difficult to gather evidence on what motivates corporate behaviour and, without the benefit of hindsight, it is hard to distinguish when corporate decision making results in deliberate, rather than incidental harm. Therefore, for its new powers to be effective, TPR will need to be clear about how it expects to implement them – otherwise there is a real risk that it will fail to deliver.
There is some evidence to suggest that TPR is beginning to make greater use of its existing powers, both formally, through court cases and determinations, and informally, by clarifying its objectives directly to trustees and employers.
The White Paper states that TPR will be given information to conduct investigations “effectively and efficiently”, with powers supported by penalties and that “taken together, these new powers will strengthen the deterrent against and punishment for reckless behaviour and give the regulator the ability to respond more quickly and decisively where they believe wrongdoing has taken place”.
These changes represent the most significant overhaul of TPR’s powers since its establishment in 2005, but the impact of enhanced powers will be dependent on the Regulator’s resources and its appetite to use them.
Much will also depend on the drafting and the eventual shape these powers take. As TPR CEO Lesley Titcomb acknowledged recently, she will need to “work closely with government to develop the white paper’s proposals, including fines and criminal sanctions, to ensure they are proportionate, act as an effective deterrent and work in practice”.
The sector as a whole will need to work together to shape these powers and to guide the government in the right direction, to ensure that the rules are fit for purpose and enforceable. Dialogue between government and stakeholders is an important part of policymaking. We hope others will join us in making this case to ensure that TPR has the right balance of powers and the resources that it needs to help trustees and employers to provide secure retirements for their DB scheme members.