Reports and Briefing Notes

Comparison of the regulatory frameworks for DC pensions

The implementation of automatic enrolment and the introduction of new pension flexibilities have meant an increased role for regulators to ensure that new policies work to the benefit of pension savers. At the same time, the challenges for regulators have increased. For example, automatic enrolment means that a greater number and wider range of employers are offering pensions to their employees, and the new pension flexibilities have brought about increased possibilities for pension scams.  

In order to address some of these concerns, Scottish Widows sponsored research to explore the advantages and disadvantages of the two main regulatory regimes for pension saving, with a focus on the impact of these for savers.The PPI conducted 13 interviews with representatives from different organisations, including pension providers, legal experts, advisers and employers’ organisations, around the effectiveness of the respective regulators. This report draws on discussions with these interviews as well as desk research.

Chapter one describes arrangements of trust and contract-based pension schemes. It goes on to outline the need for regulation of DC pensions and to provide an overview of the coverage of the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) with reference to the roles of the Prudential Regulation Authority (PRA) and Her Majesty’s Revenue and Customs (HMRC). Finally, it outlines the objectives for each regulator.  

Chapter two considers how the Financial Conduct Authority and The Pensions Regulator assess and regulate risk in DC pension arrangements. It also considers rules, under each regime, around communications with members.

Chapter three explores the advantages and disadvantages of each regulator and considers arguments for a single regulator for DC pensions.

Chapter four provides an overview of considerations for employers.

Press

Executive Summary