Whilst automatic enrolment means millions more people are now saving for retirement, the number of pension schemes in the market is reducing year on year, and there are far fewer trustees than there used to be. According to the Pensions Regulator, there were around 23,000 trustees in 2015, but numbers have now dropped to approximately 16,000 (the figures exclude small self-administered schemes and executive pension plans). Charles Counsell, the Chief Executive of the Pensions Regulator, would like to see this trend continue and has openly encouraged trustees of smaller schemes to think about consolidating their schemes, allowing members to benefit from the economies of scale afforded by larger pension arrangements.
The Regulator’s Corporate Plan of 2019 -2022 continues, maintaining that trustees, employers and advisers will need to embrace the Regulator’s ‘clearer, quicker, tougher’ regime. This is not just a slogan, but a real reflection of the way the Regulator is holding to account those who it considers to be failing to do the right thing by their scheme members or employees. Adding flesh to the bones of the Corporate Plan, Charles Counsell says that more than 1,000 schemes will ‘feel the gentle hand’ of the Regulator, in addition to the 60 schemes which face one-to-one supervision. The Regulator is therefore planning on directly engaging with more pension schemes than ever before, informing trustees of the standards they are expected to meet and tackling risks much earlier.
Once more the Regulator singles out bad record-keeping as an area of great concern, and it intends to start dealing with this by targeting those trustees who have not undertaken a review of their scheme record-keeping in the last three years. This should come as no surprise, as Regulator guidance expects trustees to review their data annually. Thereafter the Regulator will target those who may have reviewed their data but have not put sufficient steps in place to improve it. The message is clear: it’s not enough to simply measure pension scheme data.
While the Regulator has had improving pension scheme record-keeping near the top of its ‘to-do list’ for a number of years, the situation is being brought to a head as the industry moves towards the long-awaited introduction of pensions dashboards.
With the Regulator declaring its intent to focus on regulating schemes which fall short of governance and administration requirements, we are likely to see greater consolidation, especially amongst smaller schemes. We are also likely to see a further reduction in trustee numbers, as those who are less engaged or lack the appropriate skills discover that the gentle hand of the Regulator is in fact far stronger than they are used to.