75: Pensions Regulator sets out main priorities for 2022

The Pensions Regulator (TPR) has set out its main strategic priorities for 2022 in a blog published by its chief executive, Charles Counsell. Trustees should reflect on these priorities when formulating their own plans for the year ahead.

• Protecting savers and preventing scams will continue to be a key focus. Schemes will be expected to adopt a decisive and common-sense approach to the new pension transfer rules which require trustees to follow a red and amber flag system for halting suspicious transfers. Trustees will need to update their process and documents if they have not already done so. TPR is also encouraging more schemes to sign up to its pledge to combat scams.
• It has already been announced that a second consultation on TPR’s draft revised code of practice on DB funding will be delayed until late summer this year to ensure it works in a coherent and integrated way with DWP’s draft funding and investment regulations. The new rules will require trustees to formulate a scheme-specific funding and investment strategy, and to set this out in a written statement which must be submitted to TPR.
• TPR’s new, single code of practice is expected to be approved by Parliament in the summer. This will consolidate 10 of the existing codes of practice and introduce revised governance standards, including new requirements to establish an effective system of governance and to carry out an own risk assessment. Trustees should already be reviewing existing policies and procedures to identify action areas and in preparation for complying with the new code.
• The drive towards ensuring value for money saw the introduction last year of a rigorous value for members assessment for DC schemes with less than £100 million in assets and a push to DC consolidation. Relevant schemes will already be addressing their new responsibilities. TPR will also publish feedback and next steps from its recent joint discussion paper with the Financial Conduct Authority, with a view to developing a common framework to enable trustees to compare costs and charges, investment performance and service standards.
• Relevant schemes will be expected to be able to demonstrate that they have integrated climate change and ESG issues into their decision-making on investment strategies and have a robust process to assess and manage the financial risks and opportunities associated with climate change. TPR also reminds trustees required to submit Task Force on Climate-Related Financial Disclosures reports that they should do so without the need for enforcement action.
• TPR also stresses that it will take an appropriate and proportionate approach in exercising its new criminal powers and does not intend to prosecute what it considers to be ordinary commercial activity. TPR will only investigate and prosecute the most serious intentional or reckless conduct that avoids liabilities or puts pensions savings at risk. All DB scheme stakeholders should make sure they understand the scope and applicability of those new powers and ensure any risks are dealt with at an early stage of any corporate transaction.
• TPR will continue to focus on improving diversity and inclusion across the pensions industry through its new working group, encouraging schemes to ensure greater diversity in trustee boards and exploring how to reduce inequalities in saving. An action plan will be published in the coming months, but it is not clear how this will affect trustee boards at this stage.
• TPR also highlights that trustees’ now have the option of transferring to a DB superfund where a full insured buyout of benefits is not feasible in the near future. It will also be finalising the new code of practice for the authorisation and supervision of collective defined contribution (CDC) schemes. While not an action point now, the pension scheme market continues to evolve, and trustees and scheme sponsors should stay aware of changes.

None of these issues are likely to be new to DB scheme stakeholders but our team would be pleased to help trustees and scheme sponsors to not only understand their changing governance responsibilities, but also to identify risk and implement steps to ensure compliance.