For a while now, there has been a clamour for a stronger regime to govern master trusts. Given the role they play in auto-enrolment, concerns have been raised about the ease at which someone can set up/purport to offer a master trust, the fallout for savers if a master trust fails, and general weak regulation at a time when ever more savers are paying into these schemes.
The issue has provoked major media investigations, as well as warnings from providers, politicians and the pensions minister. Even The Pensions Regulator, the body charged with bringing order to a chaotic market, has admitted there are gaps in regulation which leave savers exposed.
At the same time, at the heart of many a firm lies a cavernous pension deficit. BHS and Tata Steel are prime examples of this, but are by no means the only ones.
When combined with a policy focus concentrated on individual pensions rather than the workplace, the pressure is mounting on whether TPR is fit for purpose, or whether the FCA is actually better equipped to aggressively pursue the firms that are failing to do the right thing by their employees by leaving the company pension scheme underfunded.
Do we really need another overhaul to pensions regulation? The question is a big one. The industry can, and does, argue it both ways. Some say the FCA has the necessary clout TPR is lacking to close the gaping holes in company pension schemes, while others say TPR is doing a different job to the FCA, and a better one at that.
Quite apart from the intricacies of whether to integrate TPR into the FCA, have it as an FCA subsidiary or do away with it altogether, is the question of how TPR would be funded in a different structure. Although likely to be in the minority, some providers will be paying levies to both regulators.
The pipedream would be that so-called “cost efficiencies” from having a single regulator would mean providers could redirect resources to the things that matter away from regulation – product development, for example, or improvements to customer service. Perhaps that is overly wishful thinking on my part. But whatever the structure, it is important to ensure costs are attributed appropriately.
The future of pensions regulation is understood to be being discussed at the highest levels. What comes out of those talks may go some way to addressing concerns about whether TPR is up to the job.
Natalie Holt is editor of Money Marketing. Follow her on Twitter: @Natalie_Holt_MM