On 13 June 2022 the Pensions Regulator (TPR) published its latest Corporate Plan 2022 to 2024 (Plan) setting out five key strategies to protect members and promote positive pensions outcomes. The Plan updates last year's Corporate Plan (2021 Plan), and builds on its 2021 Corporate Strategy (Strategy) which set out how TPR aimed to meet its statutory objectives across a challenging global economy with new technology-driven areas of risk and a constantly evolving UK marketplace.

The Plan broadly aims to "put savers at the heart" of TPR's work, by enhancing and protecting savers’ pensions through five strategic workstreams, assessed against various benchmarks and performance indicators. We consider each of these workstreams below. This is a helpful summary of the key developments in the pensions landscape over the next couple of years.

1. Security

New powers:

TPR will be implementing its new moral hazard enforcement powers introduced on 1 October 2021 under the Pension Schemes Act 2021 (PSA 2021), including, in due course, additional changes to the notifiable events regime in order to shore up its function as an effective 'early warning system' for pension scheme regulatory risk.

Cyber security:

In the 2021 Plan, TPR confirmed it would continue to consider and develop its work on cyber security in order to mitigate the increasingly substantive risks in this area. Master trust authorisation criteria, for example, includes an expectation that cyber defence mechanisms are in place. TPR reports it has worked with a designated administrator to roll out a pilot programme to gather information on three themes: (1) systems and automation; (2) data quality / trustee focus; and (3) understanding / willingness to pay. TPR estimates the pilot programme will run until December 2022 and, if successful, will undergo a wider roll-out beyond December 2022.

Pensions scams:

Pension scams are a key focus for TPR, as well as a hot topic for anyone working within the pensions industry. In November 2020, TPR launched its 'Pledge to Combat Pension Scams' in an attempt to address the recent wave of pensioner-scamming. Accordingly, the Plan proposes the roll-out of a revised Pensions Scam Strategy in 2022. TPR has taken into account how it has tackled pension scams to date and the substantial impact that they have had on savers, factoring in the work (which remains under review) of the multi-agency group Project Bloom, a taskforce set up by the Government to tackle pensions fraud.

Automatic enrolment (AE) and defined contribution (DC) provision:

The DC market now has 27,700 schemes, with 21.9 million saver memberships, and has been subject to a substantial 40% consolidation rate over the last decade. TPR has reinforced the need for its regulatory approach to support larger, more stable schemes that meet higher standards of governance and offer good value for money.

The Plan accordingly sets out TPR's schedule for launching a number of regulatory initiatives (RIs) to engage with schemes and employers on identified risks, potentially taking action against any parties which have failed to take appropriate steps to address those risks, with TPR proposing to undertake the first five RIs during 2022 to 2023. In relation to AE and DC provision, TPR intends to use a RI focused on the accuracy of contributions, which is due to commence during 2022. 

2. Value for money

TPR and the Financial Conduct Authority (FCA) published a joint strategy in 2018 identifying value for money as a priority area of focus. The Occupational Pension Schemes (Administration, Investment, Charges and Governance) (Amendment) Regulations 2021, which came into force on 1 October 2021, require DC schemes with fewer than £100 million in assets to prepare a rigorous 'value for money' assessment. If scheme trustees cannot demonstrate that their scheme provides value for members, they face being required to wind up the scheme and transfer assets into a larger scheme, or must confirm to TPR the steps they will take to ensure that the scheme provides good value. TPR remains clear that ''this is just the starting point'' and that it would continue ''to work closely with the DWP and FCA on a future consultation which should be published by the end of the year.''

3. Scrutiny of decision–making

Supporting good decision-making for trustees, employers and savers:

TPR wants schemes to support savers to make good decisions about their retirement savings to achieve the best possible outcomes, and consequently expects that strategic decisions are made in savers' interests. These decisions must be fair and transparent, and need to take account of environmental and social outcomes. Savers should also be able to access good advice and guidance and be signposted accordingly. The Plan builds on the joint FCA-TPR Regulatory Strategy published in 2018 and later this year, TPR plans to issue a joint discussion paper to ask the industry for views on how to encouragement engagement from savers and support them in making good decisions. During 2022 TPR will also publish a new code of practice which will combine the existing 15 codes into one online document with the aim of making it easier for stakeholders to navigate. 

The development of the Defined Benefit Funding Code:

TPR has announced a new 'Defined Benefit Funding Code of Practice' (Code), which incorporates industry feedback on the Department for Work & Pensions' (DWP) consultation on draft funding and investment regulations in Spring 2022. TPR is planning to launch its second consultation in Autumn 2022, with the Code potentially becoming operational from September 2023 onwards. TPR confirms the Code will be forward-looking, meaning that only schemes with valuation effective dates on or after the Code's commencement date will be affected. 

Improving trustee board equality, diversity, and inclusion:

In its Equality, Diversity and Inclusion (EDI) Strategy in June 2021, TPR set out how it aims to improve its own organisational diversity and inclusion, and how it would support the pensions industry to follow suit. The Strategy focuses on the need to improve EDI and, to this end, TPR will be implementing an action plan in the first half of 2022 via a RI to ''establish a current baseline of board diversity from which to build our programme of work, clearly set our expectations and develop and share best practice created by the group.'' 

Active and responsible approaches to tackle climate change:

From October 2022, trustees of schemes with £1 billion or more in assets will be required to comply with the Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 (Climate Change Regulations). The Climate Change Regulations have further fleshed out the PSA 2021 requirements on climate change and under the Occupational Pension Schemes (Investment and Disclosure) Regulations 2005 (Investment Regulations) for trustees to consider financially material Environmental, Social and Governance (ESG) factors more generally within their investment decision-making processes. TPR will continue to implement the PSA 2021 requirements on climate change through the Task Force on Climate-Related Financial Disclosures reports for only the largest schemes and master trusts, with initial reports expected between Spring and Autumn 2022, with further tranches of schemes to follow. To shore this work up, TPR will also develop a RI focused on the Climate Change and Investment Regulations, which will require schemes to publish compliant statements of investment principles and implementation statements, so these will need to be added to regular scheme administration.

4. Embracing Innovation

Developing pensions dashboards:

The PSA 2021 created the legislative framework for pension schemes to provide savers with access to data through 'pensions dashboards', offering a 'one-stop shop' for pension arrangements. The detail will be confirmed in secondary legislation by the DWP and the Pensions Dashboards Programme (PDP) at the Money and Pensions Service will publish standards in 2022. The Plan details TPR's aims to work with the PDP, DWP and FCA to launch a programme of education to highlight what is required for schemes to meet their 'dashboard duties' and be 'dashboard ready'.

Superfunds and other innovative DB models:

TPR will continue to engage with those preparing or considering developing innovative defined benefit (DB) models, including Superfunds. TPR's DB Superfunds Guidance sets out the standards TPR expects to be met by any potential superfund seeking to enter the market pending legislation being effected. In November 2021, TPR confirmed that Clara Pensions was the first Superfund that met the first phase of the expectations set out in its guidance. 

Collective Defined Contribution (CDC) schemes:

CDC schemes are expected to have the potential to change the UK pensions landscape by offering a viable alternative to traditional DB and DC pension schemes. Regulations published in December 2021 and January 2022 have now been supplemented by TPR's Code of Practice for the authorisation and supervision of collective CDC pension schemes laid before Parliament on 9 June, with TPR expecting to be ready to receive applications from 1 August. The CDC Code sets out the CDC authorisation process and how TPR will assess schemes against the authorisation criteria – both at the point of application and through TPR's ongoing supervision.

5. Bold and effective regulation

In its 2021 Plan, TPR aimed to be a ''bold and effective regulator'' in two key areas: delivering and completing major change programmes, and completing systems upgrades. This has now been further fleshed out in the Plan, which also expands on TPR's changing role as an industry regulator and the evolving world around TPR, particularly the need for greater flexibility and agility to deal with new and complex challenges. This has led to TPR's commitment to be "bold innovators" of its "own regulatory approach", with a major review of its AE Operational Strategy and long-term roadmap, to take account of the AE 2017 Review recommendations, policy changes, and further refine its approach to the full gamut of regulatory needs of today's ever-shifting pensions landscape. TPR will be undertaking previously contracted-out AE services in-house, and delivering major IT upgrades with the aim of improving its information sharing, data management and offering a more streamlined customer service experience.