UK regulators working on joint pensions strategy

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UK regulators working on joint pensions strategy

A new regulatory strategy on pensions is being developed by two UK authorities.12 Feb 2018

The Financial Conduct Authority (FCA) and the Pensions Regulator said they intend the strategy to set out how they will work together "to tackle the key risks facing the pensions sector" over the next five to 10 years.

"As part of our ongoing efforts to ensure the sector works well for consumers and workplace pension savers, we are working together on a pensions strategy which will look at how we will work together, and with stakeholders, in the coming years," they said.

Industry will be given the chance to feed in to the strategy. A webinar will be organised by the regulators, while spring events in London, Edinburgh and Manchester are already planned.

Discussion at those events will centre on the regulators' "collective view of the current landscape of the sector and our respective regulatory remits" and their "likely key areas of focus in the coming years", the FCA and the Pensions Regulator said.

Pensions expert Tom Barton of Pinsent Masons, the law firm behind Out-Law.com, said there are some "touch points" across the separate remits of the FCA and the Pensions Regulator. It therefore makes sense for the two regulators to work closely together, he said.

"The Pensions Regulator was essentially set up to regulate defined benefit (DB) schemes established voluntarily by employers," Barton said. "It has done a difficult job well over a period of years now, providing quality guidance and helping to change behaviours in the interests of DB scheme members. More recently, the Pensions Regulator has overseen the implementation of auto-enrolment and placed increased focus on employer-run occupational defined contribution (DC) schemes. Its guidance and support has seen high levels of compliance and consistent improvements in governance."

"The FCA supervises the providers, and distributors, of personal pension schemes and a product range that generally includes IPPs, SIPPs, Stakeholders, Section 32 policies and retirement annuities. However, despite the name, personal pension schemes are commonly used in the workplace and the pensions investment supply market for occupational pension schemes is generally FCA regulated. This creates a degree of overlap of the regulators," he said.

"We also now have the rise of commercial master trusts in the context of defined contribution (DC) schemes, with potentially DB to follow. These commercial ventures are set up as occupational pension schemes and fall within the remit of the Pensions Regulator. However, in many respects they resemble the sort of products supervised by the FCA. Certainly regulation is moving in that direction. Departing from its roots as a regulator of employers and trustees, the Pensions Regulator is about to oversee the authorisation of master trusts and the businesses that support them," Barton said.

"It makes a great deal of sense, therefore, for the two regulators to work closely together – it will help make sure that policy can be sensibly applied across all pension schemes: commercial, non-commercial, workplace and non-workplace, and that the whole system knits together effectively," he said.

However, Barton said that the two regulators will remain "at the mercy of policy that comes out of leftfield". He pointed to government-inspired policies such as the 'freedom and choice' initiative, as well as "more 'slow-burn' game changers" such as auto-enrolment as evidence of pensions policies that shape the nature of the regulators' work.