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Question of trust for TPR

Was John Ashcroft reading the same article regarding The Pensions Regulator? Yes, he is technically correct that all this is already within TPR’s remit but it is splitting hairs to argue the difference between “expanding its remit” and “expanding the use of powers it already has”.

When talking about “dual regulation”, Ashcroft has also switched the subject of his response to trust-based schemes when the main focus of the article is clearly contract-based schemes such as stakeholder and group personal pensions.

It might not be TPR’s role to tell people to invest in gilts but the powers it has could be used to force schemes in that direction. TPR could instruct schemes to ensure funds on offer mitigate investment risk as much as possible.

Using its words, it identifies as key issues “inappropriate design of default fund” and “provision of inappropriate fund/range of funds”. It goes on to say that “it is important the lifestyling option is well designed and well implemented so the member’s retirement income is not at risk”.

Without buying gilts or options that have the effect of turning equities into gilts, how can you ensure that “the member’s retirement income is not at risk”?

Ashcroft notes that the FSA does not have many powers relating to trust-based schemes. Is he suggesting that the FSA also regulate trust-based schemes so that these are afforded the same protections as contract-based schemes? That is, that the FSA introduce conduct of business rules, disclosure, key features, marketing rules, solvency capital rules and so on to trust-based schemes?

The key question for TPR is: “Is it going to burden contract-based schemes with even more red tape or was it simply intending to drag up standards for some trust-based schemes?”

John Lawson,
Head of pensions policy,
Standard Life


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