View more on these topics

Changing of the guard: Is TPR up to the job of regulating pensions?


The collapse of British Home Stores and the impact of the pension freedoms agenda has reignited calls for The Pensions Regulator to be scrapped and sub-sumed by the FCA.

The Work and Pensions Committee has taken TPR to task over agreeing an extremely generous 23-year deadline for trustees of the retailers’ pension fund to fill its huge funding deficit.

When the firm entered administration in April a £571m pension hole was left outstanding, leaving MPs questioning why the regulator had not pushed previous owner Sir Phillip Green harder when setting up the recovery plan.

Defined benefit lifeboat the Pension Protection Fund will have to bear the strain as it takes on the liabilities and workers yet to retire will see cuts in their benefits.

The far larger FCA, on the other hand, has just scored a big win in securing eight years’ worth of jail terms as part of its largest-ever insider trading investigation.

And in the background the pension freedoms have shifted responsibility from employers  to individual savers.

This new generation of retirees is far more likely to be purchasing products from FCA-regulated firms than schemes overseen by TPR.

Insiders say the Government and select committees will revist the case for a single pensions regulator in the coming weeks.

So is it finally time to call time on TPR and incorporate it within the FCA? Is there any merit in retaining the split in regulation? And how would ordinary savers be affected?

In the spotlight

Attention has been centred on TPR since it emerged BHS’s collapse put thousands of staff pensions at risk. While the PPF ensures they will still receive their pension, the amount is capped for deferred members yet to retire.


The regulator’s latest funding statement, published last week, estimates the majority of schemes will have seen deficits rise by around 30 per cent over the last five years. It adds the amount firms pay into schemes to make up shortfalls, compared with dividends, is falling. More than half of the FTSE350 paid out 10 times or more to shareholders than to their schemes.

TPR’s role is to balance the needs of scheme members and the health of the employer, but there are concerns it has been too easy on firms.

Money Marketing understands the Government and both the Treasury and the Work and pensions committees are preparing to raise the issue of merging TPR with the FCA.

One industry insider says: “TPR’s abysmal performance in front of the committees and the growing liberalisation of pensions, in conflict with auto-enrolment, raises the question of whether TPR has enough resources to do it all. Westminster is looking at whether the current structure is still the right one.”

Work and Pensions committee member and Conservative MP Craig Mackinlay says: “TPR is getting a little bit stretched now. I’m a free marketeer but when we’re talking about pensions and people’s nest eggs, there is a case for fairly stiff regulation.”

Wide swathes of the pensions industry agree.

Hargreaves Lansdown head of pension research Tom McPhail says: “The pendulum is swinging. I have believed for a number of years now we need one regulator, we need to find a way to reverse TPR into the FCA.”

He says incoming FCA chief executive Andrew Bailey spent most of his career at the Prudential Regulation Authority, while TPR boss Lesley Titcomb held a variety of roles at the FCA.

McPhail says: “So you’ve got a certain amount of regulatory consolidation happening anyway.


“Given the direction of travel on workplace pension provision and the freedoms and the increasing emphasis on the individual, a lot of TPR’s functions will have to increasingly dovetail with the individual retirement agenda. There’s a need for the regulatory landscape to keep up with what’s been coming out of Westminster over the last couple of years. The feeling that there needs to be change is getting stronger all the time.”

But TPR’s remit expands beyond trusts. It is responsible for automatic enrolment in its entirety, including contract-based schemes.

Former pensions minister, now Royal London director of policy Steve Webb, says the case for a merger is “very strong” but warns auto-enrolment must be the priority.

He says: “When auto-enrolment was being rolled out in 2012 I felt it would be quite a distraction to start reorganising regulation, not least because the FCA itself was new. Once the rollout of auto-enrolment is complete the case for merging the regulators in some way is very strong. In a sense the problem is the regulators mirror the Government departments, and if I had carried on as pensions minister I would have asked for a joint DWP and Treasury role because there are all sorts of absurd divisions in pensions regulations.

“The goal has got to be one department and one regulator.”

Reform, don’t scrap

Not everyone is convinced TPR should be scrapped entirely. Independent pensions consultant John Ralfe argues the smaller regulator should be restructured to focus solely on legacy DB plans, leaving all DC work and auto-enrolment to the FCA.

He says: “There’s a world of difference between the underlying economics of a DB pension and a DC pension – this means the DB  regulatory framework, and the people required to do the regulating, are very different.

“DC pensions, especially with freedom and choice, are glorified savings arrangements, not pensions at all, so there is a case for putting it with the FCA, leaving DB regulation to people who are focused just on DB.”

But Now: Pensions director Adrian Boulding says there is no case for reforming TPR, adding the regulator actually needs extra powers.

He says: “We benefit from having TPR as an independent regulator in its own right, focusing on workplace and reporting into DWP. Which is in stark contrast to the FCA, which is a retail-focused regulator reporting to the Treasury.

“TPR is punchy and is pushing the boundaries. They are unique in having this workplace focus and, given that is where most people are going to be making their savings, it is worth preserving. I would not make any change to the split, what TPR needs is greater powers. They are constrained, they can only do what the statute allows them.

“The pensions minister knows that, and she will push for them to have more power.”

Boulding goes further, suggesting TPR assumes oversight for some areas currently under the FCA, such as group personal pensions.

Both Boulding and Webb hit back at criticism the regulator has had too light a touch with firms like BHS and Tata Steel, which is said to be struggling to attract a buyer because of a nearly half a-billion-pound pension deficit.

Webb says: “Lesley Titcomb made a fair point when she was being questioned, that TPR works within the remit the Government sets it. So, for example, they could not have blocked the sale of BHS. And they were not even obliged to be told about it, so it’s a bit unfair saying they should have done something.

“Having said that, a 23-year recovery plan does look a bit odd but it’s easy to say that from the outside.”

Boulding adds “cases like BHS are not TPR’s problem, it is the Government’s problem”. In March 2013 Chancellor George Osborne handed TPR a new duty to compel trustees to take into account the impact on employers of supporting DB schemes. But Boulding predicts this stance is likely to soften and swing back in favour of schemes.

A TPR spokesman says: “We recognise the laws governing trust and contract-based schemes are quite distinct and the legal frameworks which govern the operation of TPR and the FCA are very different.

“These differences would not be removed simply by creating a single regulator for pensions in one place. Much more fundamental change to pensions and other legislation would be required.

He adds: “TPR is part-way through the implementation of auto-enrolment, and will continue to  focus on the successful rollout of auto-enrolment to ensure many millions of people are saving into a pension for the first time. We believe the thinking around a single regulator for pensions needs to take all these aspects into consideration.”

A Government spokesman says: “Our pension reforms allow people who have worked hard and saved hard all their lives to access their retirement savings more flexibly. It is absolutely right these people are protected by strong, independent regulators.

“We work closely with both TPR and the FCA to ensure they have the necessary powers at their disposal.”

The FCA declined to comment.




Think-tank brands income tax changes ‘misguided’ and ‘regressive’

Chancellor George Osborne’s moves to increase the tax-free personal allowance and raise the higher rate threshold have been condemned by the Resolution Foundation. Osborne announced the personal allowance would reach £11,500 as part of a pledge to reach £12,500 by the end of the Parliament, while the 40p tax threshold would move from £42,385 to […]


Treasury mandarins admit claims management clampdown regrets

Two of the Treasury’s most senior civil servants have admitted the Government should have moved faster to clamp down on claims management companies. The National Audit Office reported last week that CMCs had gained up to £5bn from claims handled by the Financial Ombudsman Service. Regulation of CMCs is currently handled by the Claims Management […]


Former HSBC chair admits Swiss private bank acquisition regrets

Former HSBC chairman Lord Green has admitted the bank should have been more diligent in its acquisition of a Swiss private bank later found to be aiding tax evasion. HSBC acquired its Swiss private banking arm in 1999, when Green was responsible for investment banking, private banking and asset management. Speaking to the House of […]

Choose life…

Sarah Scott  – Marketing Consultant, Royal London  This month sees the return of Renton, Sickboy, Begbie and Spud in the sequel to the film Trainspotting. Just over 20 years later, we return to see exactly how life treated the characters whose lifestyle was less than ideal back in 1996. Did they choose a job, choose […]


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. There is nothing broke that needs fixing by a merger of regulators. I suspect that this is being driven by behind-the-scenes lobbying by vested interests: namely the insurance companies.

    There has long been a big difference between the degree of regulation under which contract based schemes such as GPPs operate and the relatively lightly regulated trust based schemes. In the past the insurers have let this go. But with auto-enrolment, the number of master-trusts is proliferating and threatening significant competition to GPPs. My guess is that the insurers see the best way of leveling up the playing field is to have the FCA regulate everything.

    Powerful forces, vested interests.

  2. The TPR is a Quango, run by bureaucrats. Since when were bureaucrats up to the job for which they are tasked? Are we to assume that the TPR will be a first? So they will be subsumed by another Quango, who will no doubt ensure that more firms go under or fail to find a rescuer because of their horrendous pension liabilities.

    Thereby ensuring not only no pension, but also no job. Great result.

    I am starting to wonder how many advisers were pilloried for transferring DB schemes, whose members then received recompense and perhaps many others now wish that they had transferred out.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm