The Pensions Regulator (TPR) has inadequate processes in place to measure performance, a National Audit Office (NAO) report has found.
The audit body said the watchdog had adopted a sound approach to defined contribution (DC) regulation – as well as increasing the proportion of resources devoted to it and improving its knowledge of DC issues since the NAO urged it pay more attention to the area five years ago.
But it said insufficient indicators for measuring performance and the lack of clear, overarching objectives for the wider regulatory system made it impossible to say whether the regulator provides value for money.
NAO head Amyas Morse said: “It is not possible to judge how well TPR is doing to protect the benefits of members of work-based pension schemes.
“While the regulator’s overall approach is sound, its performance measurement system is not strong enough.”
The report recommended TPR puts a greater focus on measuring outcomes and uses more stable performance measures from year to year, so long term trends could be analysed.
Responding to the report, the regulator 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.”
Morse called for the agencies involved in regulating the market – which includes the Department for Work and Pensions and HM Treasury as well as TPR – to develop a concerted approach.
The report noted that “none of these bodies leads on, or is accountable for, the regulatory system as a whole”.
TPR chairman Michael O’Higgins welcomed the report and said the regulator would reflect on its contents.
In its annual report, published last week, the watchdog said government spending restrictions had hampered its work in both DC and defined benefit regulation.
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