Due to the recent transformation of the pensions industry (in particular, the number and structure of existing schemes), the Pensions Regulator (TPR) announced significant restructuring of its functions on 22 February 2024. 

TPR’s restructuring

Namely, TPR announced that they will create three new regulatory functions:

  1. Regulatory Compliance – protecting savers by providing “effective and efficient delivery of regulatory compliance services, targeting schemes and employers”, 
  2. Market Oversight – enhancing the market by engaging with schemes and stakeholders in the industry, to drive up “value for money and trusteeship”, and 
  3. Strategy, Policy and Analysis – evolve regulation and support innovation by analysing how industry responds to its regulatory approach.

These will sit alongside TPR’s existing functions of Operations, Digital, People, and Data and Technology. 

This expansion of its functions solidifies the already wide remit of TPR. It will be interesting to see how TPR exercises these seven functions – particularly, how they interact given the potentially overlapping nature of some of the functions.

The transformation of the industry

As per TPR’s press release, these reforms have been prompted by the “radical transformation” of the industry over the last decade. For example:

  • Automatic-enrolment, 
  • Reduction of defined benefit (DB) schemes (with DB schemes now accounting for just 4% of total schemes, which is only going to reduce further as per TPR’s recent DB report). 

The main change cited by TPR, though, is the move “towards a competitive marketplace of fewer, larger schemes” – with 90% of defined contribution employer schemes now within master trusts, and 82% of savers now “concentrated in the largest five schemes by assets under management”.

TPR, therefore, conclude that over the last decade, the pensions industry has “changed from a landscape of one employer, one scheme, to a competitive marketplace of competing master trusts and consolidation vehicles” (with additional members due to auto-enrolment).

Aims of the restructuring

Naturally, with a radically different environment, there are “different risks and opportunities for savers and the economy” and, accordingly, the regulator must evolve its functions. 

Sarah Smart (TPR Chair) explains that the restructuring is intended to enable the regulator to respond more swiftly to “address compliance failures and market-wide risks while being more dynamic in our industry engagement and bringing innovation to the fore”. 

This article was written by Clive Pugh and Callum Duckmanton.