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Dual regulation fears for pension companies

‘Overkill could drive good schemes out of the market,’ claims Standard Life’s Lawson.

The industry is fighting a rearguard action to fend off plans for dual regulation of group personal pensions and group stakeholder schemes amid fears it could force many employers to pull the plug on pension provision.

The consultation for The Pensions Regulator’s plans to expand its remit to work in tandem with the FSA to regulate defined-contribution schemes, including group stakeholder pensions, ended this week.

Under the proposals, TPR will have the power to ban trustees and publicly name and shame advisers, providers and trustees that fail to meet the required standards. The regulator pledges to focus on the publication of good practice guidance setting out the standards expected of well run schemes.

Standard Life head of pensions policy John Lawson warns that there is serious risk of regulation overkill as contract-based defined-contribution pension schemes are already heavily regulated by the FSA.

He says that a significant majority of employers operating GPPs or GSHPs have 10 or fewer employees and could scrap their schemes because of excessive regulatory pressures.

Lawson also accuses TPR of posing as an economic regulator by proposing to “address the risk of unduly high charges”. He also warns that an obsession with removing risk will lead to lower returns for policyholders with savings invested in low-risk vehicles such as gilts.

He says: “Why the hell is The Pensions Regulator poking its nose into personal pensions and stakeholder? This regulation overkill could drive good schemes out of the market.”

A spokeswoman for The Pensions Regulator says: “There are currently no proposals to increase legislation. We recognise that we are not the only player in the defined-contribution environment. A key part of our regulatory approach is working in partnership, not only with other regulatory bodies but also with industry partners.”

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