Regulators must be aligned to make pensions clearer for consumers

The DWP has appointed Mary Starks to lead a review of The Pensions Regulator (TPR).

Starks is expected to report in May 2023. Public bodies are regularly reviewed to ensure they are accountable and working for taxpayers.

AJ Bell head of policy development, Rachel Vahey, comments on the review: “The Pensions Regulator has an important task in making sure workplace pension schemes are operating in the best way possible for pension scheme members; protecting their savings and helping them to achieve a better financial later life. TPR has to oversee both defined benefit and defined contribution plans.

“It has to make sure it works closely with its sister regulator the FCA. There are many instances where the two cross paths, and it is up to both bodies to work closely together to design a robust and consistent regulatory framework, which works well on both sides of the regulatory fence. However, there have been instances where it has not always been the case – for example when designing a framework for stronger nudges to guidance, where we have different requirements for personal and workplace pensions.

“Likewise, when it comes to illustrations the FCA oversees those on point of sale documents, but illustrations included in annual statements are regulated by the DWP. Rather than adopt the same basis for calculating those illustrations, we are left with two systems using different methodologies and assumption to forecast the future value of an individual’s pension policy. This is clearly unhelpful for consumers, who need extra layers of pension complexity like a hole in the head.

“This has never been as important. Over the next year or so, the two regulators need to work together to develop a value of money framework for all pension plans, and roll out the implementation of pensions dashboards. And all against the background of a cost-of-living crisis.”