This section outlines the regulatory framework and identifies the main authorities and regulatory bodies of the pensions industry. It includes information about the Pension Regulator’s powers, reporting system and Codes of Practice.

Comment

Opra, the Occupational Pensions Regulatory Authority, was the first pensions policeman. It came into being in April 1997. It was set up to protect the interests of members of occupational pension schemes which did not meet their legal obligations under the Pensions Act 1995.

As well as issuing regular bulletins reviewing its casework and explaining some of the decisions and determinations made by its review committees, Opra published a guide to help trustees understand their duties and responsibilities.

Opra also acted as the Registrar of pension schemes, until its closure on 6 April 2005 when it was succeeded by the Pensions Regulator.

The Pensions Regulator

The Pensions Regulator succeeded Opra with a wide educational remit, to work with trustees, employers and pension professionals to raise standards of scheme administration. Its aim is to protect the benefits of members of work-based pension schemes: to promote good administration of work-based pension schemes [see 1.27.5 and also 25.1.20 (Note)] and to reduce the risk of situations arising that might lead to claims for compensation from the Pension Protection Fund [see 16.10]. In carrying out its role, the Regulator also aims to identify and focus on the areas of greatest risk to members. Targeting badly run and high-risk schemes will enable well-administered schemes to continue without unnecessary regulatory burden. The Regulator also has a wider role:

Data collection – Trustees and scheme managers are responsible for notifying changes to ‘registrable’ information online such as the scheme’s address, details of trustees, types of benefit provided by the scheme, etc. [see 25.2]. Data is also collected online via scheme returns [see 25.1.11 (Notes)], via reports of significant breaches of the law from ‘whistleblowers’ [see 25.8], and via reports of notifiable events [see 11.5] from trustees and employers. The Regulator is also able to demand documents (or other information) from trustees and employers, among others, relevant to its work as a Regulator.

Powers – the Regulator’s powers fall into several categories: (a) investigating schemes (via gathering information) (b) putting things right (after problems have been identified) (c) investigating avoidance (to ensure employers and individuals do not ‘side-step’ their obligations), and (d) receiving reports and funding information (from schemes unable to comply fully with the funding framework).

Codes of practice – approved by Parliament, these give guidance for, and set out standards that the Regulator expects from those having duties under pensions legislation including those involved in scheme administration and the level of knowledge and understanding required of trustees.

See the Regulator’s website: www.thepensionsregulator.gov.uk.

The powers of the Pensions Regulator have been extended by the Pensions Act 2008 and supporting Regulations. Effective from October 2012, the Government will be introducing (i) automatic enrolment into a qualifying workplace pension [see 2.10.1] (ii) a compulsory minimum employer contribution [see 2.10.7] (iii) a new compliance regime to ensure that employers meet their auto-enrolment obligations [see 2.10.4] and (iv) setting up a new, low-cost simple pension scheme (currently referred to as the ‘personal accounts’ scheme [see 2.10.1 (Note)] to ensure that all employers have access to a suitable pension scheme in order to meet their new duties.

The Pensions Regulator’s new duties will include a further objective: to ‘maximise compliance’ with (a) the new employer duties under the Act, including auto-enrolment (i.e. to ensure that all eligible jobholders are automatically enrolled in a good quality pension scheme) [see 2.10.1] and (b) new protections for workers, including ‘the prohibition on inducing opt-out from a qualifying pension scheme’ [see 2.10.8(Note)].

The Pensions Regulator’s new powers also give it opportunity to ‘take proportionate, graduated compliance action’ where ‘education and enabling activities fail’. Action to overcome non-compliance is expected to (i) commence with a warning(s) followed by (ii) a statutory notice and thereafter (iii) move to fixed penalties and/or escalating penalties if non-compliance persists. Criminal prosecution will be an option for the most serious cases of wilful non-compliance with key employer duties. [See 2.10.13 and 2.10.13 (Note)]