Following a damning report on the state of defined contribution regulation from the National Audit Office last week, Jenna Towler and Jack Jones ask: should there be one regulator for workplace pensions?
The regulation of anything in finance is always going to be a complicated job, some might say a poisoned chalice.
The Pensions Regulation (TPR), the body responsible for oversight of the UK’s workplace pension schemes, was given a unfavourable report from the National Audit Office (NAO) last week. The report specifically looked at work it was doing in the field of defined contribution (DC) scheme regulation.
The report concluded the Brighton-based watchdog has inadequate processes in place to measure its performance.
A tale of two regulators
While the report said TPR had adopted a sound approach to DC regulation, and had significantly increased its scope in the past five years, it was not impressed with what it said were “insufficient indicators for measuring performance” and a lack of clear, overarching objectives for the wider regulatory system.
Value for money
It concluded it was impossible to tell if the current set up was value for money.
Responding to the report, TPR said: “Effective outcome measurement in the realm of DC pensions is intrinsically challenging, not least due to the long-term nature of pension saving, the difficulty of identifying objective benchmarks, and the wide range of factors which can affect pension outcomes for members.”
Commentators in the pensions space thought the currently fractured arrangement for DC regulation could be changed for the better. At present the Financial Services Authority (FSA) regulates contract-based DC, while TPR has responsibility for trust-based DC schemes.
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