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24.0 Introduction

This section outlines the regulatory framework and identifies the main authorities and regulatory bodies. It describes The Pension Regulator’s powers, reporting system and Codes of Practice.

Comment

The Pensions Regulator

The Pensions Regulator's duties include a wide educational remit, to work with trustees, employers and pension professionals to raise standards of scheme administration. Its aim continues to be to protect the benefits of members of work-based pension schemes: to promote good administration of work-based pension schemes and to reduce the risk of situations arising that might lead to claims for compensation from the Pension Protection Fund [see 16.10]. The Regulator also aims to identify and focus on those areas of greatest risk to members, targeting badly run and high-risk schemes  whilst  enabling well-administered schemes to continue without unnecessary regulatory burden.

The results from recent research by the Regulator have fuelled its concerns that in some respects the overall level of governance of schemes falls below that required. Consequently, it has embarked upon a programme to increase the standards of trusteeship of pension schemes, called ‘21st Century Trusteeship’. A key aspect of this programme is to help trustees to understand what is expected of them, by providing more practical examples of how to satisfy regulatory requirements. A new section of the Regulator’s website, www.thepensionsregulator.gov.uk/21st-century-trusteeship.aspx, has been created to house this information, which will be added to over time.

The Regulator also published a review in July 2017 called ‘TPR Future’ in which it set out changes it intended making in respect of how it will discharge its regulatory duties, against a background of criticism that it was not being tough enough, and also that it was not using all the enforcement tools available to it. As a result, it is in the process of changing its approach to its regulatory work, under five headings:

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clarifying its identity and improving engagement with stakeholders

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setting clear expectations of what it requires from stakeholders

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improving regulatory oversight (abandoning the previous softer approach of ‘educate, enable, enforce’)

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using a wider range of regulatory interventions

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being more efficient and effective (and consistent) whilst adopting a more adaptable approach to meet the fluctuating challenges it faces.

The practical effect since the publication of that review has been a toughening of its enforcement efforts, with more and larger fines being levied, and more criminal charges being brought. One key area where enforcement has been stepped up is in respect of compliance with information provision, both by trustees and employers, since the Regulator requires accurate information in order to be able to assess whether any regulatory action might need to be taken.

It also has a wider role in relation to:

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Data collection – trustees and scheme managers must notify (online) changes to ‘registrable’ information such as the scheme’s address, its trustees, types of benefit it provides, etc. Data is collected online via scheme returns, via 'whistleblower' reports of significant breaches of the law, and via trustees' and employers' reports of notifiable events. The Regulator has authority to demand and obtain documents (or other information) from trustees and employers, among others, relevant to its work as a Regulator.

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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 with the funding framework).

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Codes of practice – approved by Parliament and issued by the Regulator, 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: http://www.thepensionsregulator.gov.uk

The Pensions Regulator's powers under the Pensions Act 2004 [see 2.6.2] were widened by the Pensions Act 2008 [see 2.10.4(b)(ii) (Note)]. Effective October 2012, the Government introduced (i) automatic enrolment into a qualifying workplace pension (ii) a compulsory minimum employer contribution (iii) a new compliance regime for employers and (iv) a simple, low-cost pension scheme (named NEST) so that all employers have access to a suitable pension scheme so as to meet their new duties. [See Section 25 for the detail]

The Pensions Regulator has an objective: to ‘maximise compliance’ with (a) employer duties, including auto-enrolment and (b) protections for workers, including ‘the prohibition on inducing opt-out from a qualifying pension scheme’.

Its powers let it ‘take proportionate, graduated compliance action’ where ‘education and enabling activities fail’. Action to overcome non-compliance will (i) start with a warning(s) followed by (ii) a statutory notice and then (iii) move to fixed 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.













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