The Government is facing calls to create a new levy regime for trust-based pension schemes due to concerns about the lack of regulatory protection for savers.
The regulation of pensions is divided between the FSA, which focuses on insurers and contract-based schemes, and The Pensions Regulator, which targets employers and trust-based schemes.
The budgets of the two regulators are vastly different. The FSA had £578.4m available to spend in 2012/13, while TPR’s budget was just £32.9m.
Aviva corporate benefits head of policy John Lawson says the governance that sits around trust-based schemes is relatively weak.
He says: “Trustees are not subject to any close and continuous supervision. Introducing a new levy regime for trust-based schemes would allow sufficient staffing at TPR to supervise more closely the activities of trust-based schemes and reduce the number of schemes because a lot of the small players would not be willing to pay a levy.”
Lawson says the new regime should combine a flat levy, which all schemes would pay regardless of size, and a per-member fee.
Trust-based scheme Now Pensions chief executive Morten Nilsson says: “I agree TPR needs more money but I think it should come directly from the Government rather than an industry levy.
“I would be in favour of having some kind of licensing where you have to apply to the regulator to set up a trust-based scheme for auto-enrolment however. At the moment the barriers to entry are too low.”
A Department for Work and Pensions spokeswoman says: “We are currently looking at the broader issues of scale but a new levy is not something being considered.”
A TPR spokeswoman says: “We are encouraging trust-based schemes to adopt a ‘comply or explain’ disclosure framework to demonstrate how they meet the DC quality features, or explain any inconsistencies.”