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National Audit Office report: The Pensions Regulator: Progress in establishing its new regulatory approach

The Pensions Regulator: Progress in establishing its new regulatory approach

“My report in 2002 into Opra detailed a number of failings, so to be able to report good progress by its successor in establishing new regulatory arrangements is very welcome. “The Pensions Regulator has successfully put in place a framework to identify and address the key issues and risks to private sector final salary pension scheme members. Central to that has been the strategy of addressing the areas of greatest risk. The next step for the Regulator is to continue its push to roll out the same level of regulatory oversight to money purchase schemes as it has for final salary schemes.”

“My report in 2002 into Opra detailed a number of failings, so to be able to report good progress by its successor in establishing new regulatory arrangements is very welcome. “The Pensions Regulator has successfully put in place a framework to identify and address the key issues and risks to private sector final salary pension scheme members. Central to that has been the strategy of addressing the areas of greatest risk. The next step for the Regulator is to continue its push to roll out the same level of regulatory oversight to money purchase schemes as it has for final salary schemes.”

Sir John Bourn, head of the National Audit Office

 

The Pensions Regulator has been effective in establishing clear links between its statutory objectives and how it goes about meeting them, and has made good progress in addressing the problems left by the Occupational Pensions Regulatory Authority (Opra).

The good progress has been acknowledged by the Pensions Regulator stakeholders: 78 per cent of whom believe that risks to private pension scheme members would increase in the Regulator’s absence.

The National Audit Office and the Public Accounts Committee reported on Opra in 2002 and found that the Regulator had inadequate powers, for example in terms of enforcing compliance or gathering information. 73 per cent of the Pensions Regulator’s stakeholders consider it now has adequate powers.

The Pensions Regulator was established in 2005 to replace Opra. It regulates private sector pension schemes, in which some 20 million people invest. The Regulator has successfully set about addressing a number of Opra’s weaknesses and has developed a strategy for dealing with the areas of greatest risk.

As such, the initial focus of the Regulator has been on final salary schemes and substantial progress has been made. The early evidence indicates that final salary schemes in deficit are planning to eradicate the deficits over shorter timescales than previously, and that most schemes are targeting higher levels of scheme funding.

The Pensions Regulator is now also addressing risks to money purchase schemes (working with the Financial Services Authority) which its research shows have lower governance standards than final salary schemes. This includes raising awareness of its role and giving greater focus to smaller schemes.

 

Publication details:

ISBN: 9780102951219 [Buy a hard copy of this report from TSO]

HC: 1035 2006-2007

Published date: October 26, 2007