On September 18, 2023, the DWP published an Independent Review of the Pensions Regulator. The review, on which Mary Starks the former chief economist at the FCA was the lead reviewer, was undertaken to ensure that the Regulator remains fit for purpose and the report concludes that it is broadly well-run and well-regarded. However, the review concluded prior to the Chancellor's Mansion House speech on July 10, 2023. The report concludes that the Regulator is broadly well-run and well-regarded, noting successes in its track record, for example, the implementation of automatic enrolment.
The report sets out 17 recommendations for the Regulator. These focus on three main areas:
- Risk and growth. It will be important for the Regulator to play a major role in investment policy discussions as an informed and expert voice aligned with the interests of savers. This follows the impact of the use of LDI by pension schemes in 2022 as well as "broader policy concerns" about productive finance.
- Compliance and enforcement. The review notes that the Regulator has a "thoughtful approach to driving compliance by both employers and pension schemes". This relies on assisting with and encouraging compliance, falling back on enforcement action only when necessary. However, while this is effective at driving compliance, the review notes that this has left some stakeholders questioning the Regulator's appetite to punish wrongdoing. The review recommends that the Regulator is aware that it is important that it is known for taking tougher action when necessary.
- Digital transformation and value for money. Over time the Regulator has grown significantly to address the additional workload associated with the UK's exit from the EU and the COVID-19 pandemic, as well as the addition of new responsibilities. The review states that the Regulator should find ways to discharge existing functions more efficiently, "to avoid inexorable growth as its remit expands". This can include the use of digital transformation, which the review notes is an opportunity to transform ways of working and minimise the significant risk of "spending scarce budget badly".
We will examine the report in more detail in our October 2023 pensions briefing.
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