By Nausicaa Delfas, CEO of The Pensions Regulator
I am making a call for action — we need to work together to make the system the best it can be for savers.
“We need to do this so that pensions deliver a pot that enables savers to have confidence, empowerment and security in later life.
We need to do this to support savers when they come to use their money. And we need to do this to make the process of decumulation clearer and more accessible, and to ensure we protect savers from scams, poor advice, and lost value.”
‘Value for money is a game changer’
Value for money was a key theme in Nausicaa’s speech. She said there is a “lack of innovation and fluidity in the market” which is leading to significant investment risks in a rapidly growing market which needs to adapt.
The industry, she said, needs to move away from a short-term focus on cost to deliver real, long-term, holistic value for savers. “We want industry to change its mindset. From prioritising low costs to putting value first. And by doing so to drive innovation in the interests of savers.”
She focused on the new joint framework currently being developed by the Department for Work and Pensions, Financial Conduct Authority and TPR. She told delegates: “This framework will increase transparency and competition in the market and drive-up standards across the board. Properly instituted and given its rightful place at the centre of thinking, our work to deliver value for money should be a game changer.
“We need to make genuine changes to the system, not merely adjust some minor points. We need fundamental shifts in thinking and delivery.”
Consolidation — no more excuses
Nausicaa made clear that TPR would be challenging trustees not prepared to leave the market and put savers into better run schemes if they cannot meet the standards TPR expects.
She said: “Consolidation continues at pace within DC and our position is clear: no saver should be in a poorly performing scheme that doesn’t offer value for money. Where we find poor performance, the message is clear: wind up and put your members into a better run scheme. Or we will consider all powers at our disposal.
“Where there may be barriers or practical issues, we will work with the market to address them - for example where guaranteed annuity rates exist in DC schemes — and we will be crystal clear with all trustees about what is expected of them, and when.”
“Unapologetic on demanding high standards”
Nausicaa highlighted the ongoing need for trustees to meet high standards of administration and governance, including to address equality, diversity and inclusion and environmental social governance issues. She said: “Savers deserve more than minimum standards — we are unapologetic about the standards we expect from trustees — savers would expect the people looking after what is for many their entire retirement savings to be appropriately skilled and qualified.”
She also made clear that TPR will be pushing towards greater professional trusteeship. With a clear message to trustees, she said:
“We should all do more to ensure that every trustee body has an appropriate level of skill and professionalism. We are asking you to consider: ‘Is our offering the right one’? These are tough, searching considerations, but absolutely the right questions to be asking as we address the pensions challenge.
“In order to achieve all of the ambitions here, fundamentally we believe that every trustee body should include someone who meets professional standards.”
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