The Pensions Regulator’s Corporate Plan 2023 to 2024 sets out our direction for the next year and provides an overview of our priorities from 2024 onwards.
Published: 21 April 2023
Chair’s foreword
Pension savers are at the heart of our work. In last year’s Corporate Plan, I set out the saver outcomes that we are aiming for — and we are working hard to drive these ambitions forward.
We commit in our Corporate Strategy to evolve our focus, acting where we can make the most difference — and for the benefit of all savers. We continue this journey.
We are preparing for our new funding code, which will enhance the security of savers’ outcomes in defined benefit (DB) schemes. We are also laying the foundations for a significant increase in focus on the quality of outcomes in defined contribution (DC) schemes.
This Corporate Plan details the activities that will deliver this change, setting out our priorities for 2023 to 2024 and providing a look beyond. It is the third year of our three-year planning cycle, which began when we published our strategy in 2021.
Our environment
We have formed our plans in the wake of the coronavirus pandemic, war in Ukraine, and increasing cost of living pressures. In the face of such economic uncertainty, our work to enhance and protect people’s financial futures has never been more important.
We have also seen the risks of volatility through the movements in bond yields in late 2022 and the impact this had on liability-driven investments (LDI). Stability in the market is fundamental to confidence and security in pensions. We continue to implement the lessons learned from these events — which reinforce the importance of coherent and aligned collaboration with our stakeholders, ensuring that expectations are clear and are met, and that emerging issues are identified and addressed swiftly and effectively.
The year ahead
Times of financial strain underline the importance of saving for later life. This means that savers are automatically enrolled into a pension scheme and that the correct contributions are made. We are determined that people get the pension they are entitled to.
These savers rely on the pension system working as best as it can over the lifetime of their saving. That is why we are working with the Financial Conduct Authority (FCA) and the Department for Work and Pensions (DWP) to develop a value for money framework, which will equip those making decisions on behalf of savers with the tools they need to enable a clear focus on delivering good pensions outcomes. This framework will increase transparency and competition in the market and drive up standards.
The framework will underpin a firmer focus on value for money. Our message is clear: schemes are expected to provide good value for money — and those that do not must be improved or should leave the market. This leads me to re-affirm our commitment to driving high standards of governance and trusteeship, not only through our regulatory work and the launch this year of our new general code, but also as we explore options for ensuring high standards.
We are also getting ready to launch a new DB funding code and regulatory framework in April 2024, improving our ability to ensure that savers in DB schemes get the money promised to them.
As our work evolves, so do we. Our ambition to be a data-driven, digitally enabled regulator is being taken forward through our new digital, data and technology directorate.
We are also focused on ensuring that, as we change, we retain the right skills, tools and partnerships in place so that we can deliver against our objectives.
We move into 2023 to 2024 without Charles Counsell, who has stepped down as our Chief Executive. Charles was the driving force to putting savers at the heart of our work and has led from the front in forming a vision for the culture and workplace we aspire to.
I am delighted to welcome our new Chief Executive, Nausicaa Delfas. Nausicaa has our commitment to savers, equality and diversity, and delivering value at the core of her priorities. She will bring great experience and energy to our work and is as excited and focused as I am on the plans that we set out below.
Our success in delivering these plans relies on the talent and commitment of our team. Our People and Culture Strategy is fundamental to the achievement of our ambitions and we will give this the focus it needs and deserves.
I am determined that we attract a diverse and highly skilled team who feel a strong link between the work they do and the impact it has on society. We are fostering a culture where people can grow, learn and be the best they can be.
An important year lies ahead. We have much to do and the right team to do it.
CEO’s introduction
I joined TPR as Chief Executive Officer on 1 April 2023, and am delighted to be leading the organisation in its critical work of protecting, supporting and expanding workplace pensions saving in the UK.
The pensions landscape is ever changing — and this brings with it opportunities and challenges. Our focus will be to continue to protect savers’ money, to enhance the pension system and, as we look to the future, help to drive innovation in savers’ interests.
As this Corporate Plan sets out, we have a full and ambitious agenda for the benefit of savers. Our focus is right across the savings journey, from joining a scheme to taking money out in retirement.
To deliver our plan, we will continue to build our organisational and digital capabilities, deliver value for money, and work collaboratively with our regulatory partners and stakeholders in the wider pensions environment.
Our purpose
Millions of people rely on an occupational pension, alongside their state pension, to support them in later life. For many, this will be the only income they have to live on in retirement.
Our statutory objectives provide our mandate as well as the foundations for our Corporate Strategy, published in 2021. Our strategy sets out our long-term ambitions and the objectives we will pursue in putting savers at the heart of our work.
Our strategy analyses different groups of pension saver, considering age, income, and other characteristics, so we can respond to the differing needs and challenges faced by different groups. This means we are evolving our focus from a scheme-based view to one that centres on saver outcomes.
We have made the following commitment to pension savers:
Pension savers are at the heart of all that we do.
Savers who are building their pension pots can expect us to enhance the quality of their savings outcomes.
Savers that have built up pension pots and are in, or approaching, retirement can expect us to protect the money they have saved.
Delivering on our commitments
We will deliver on our commitment by pursuing five strategic priorities:
- Security: Savers’ money is secure.
- Value for money: Savers get good value for their money.
- Scrutiny of decision-making: Decisions made on behalf of savers are in their best interests.
- Embracing innovation: The market innovates to meet savers’ needs.
- Bold and effective regulation: The Pensions Regulator (TPR) is a bold and effective regulator.
Our previous Corporate Plan defined the outcomes we want to achieve for savers within each of our strategic priorities. These outcomes set the expectations savers should have of us and guide our work, anchoring our strategy in our day-to-day operation.
Our three-year roadmap
Following publication of our strategy, our 2021 to 2022 Corporate Plan kicked off our three-year journey to embed and progress our commitment to pension savers. At a time of global economic uncertainty and volatility, we have remained true to our course, yet flexible in our work; monitoring and addressing emerging risks as appropriate.
As we move into the final year of our three-year cycle, we remain alert and responsive to the challenges in the world we regulate.
The risks to savers’ outcomes
Challenging economic conditions impact savers across the pensions landscape. We are all still dealing with the impact of the COVID-19 pandemic while facing global instability and growing cost of living pressures at home. Against all this, we must all respond to the challenge brought by climate change.
The war in Ukraine has added more pressure to the global supply chain, energy prices and agricultural production. This in turn has contributed to a rise in inflation to levels not seen in decades, surpassing income increases. This inflationary pressure, combined with a reduction in consumer demand, constrains economic activity and limits growth.
As well as presenting challenges for employers, pension schemes and the wider marketplace, the fall in living standards impacts upon people’s ability to save for retirement and can drive hasty decision-making and increase vulnerability to scams.
In forming this Corporate Plan, we are especially mindful of the following risks:
Market stability and resilience
The impact of the movement in government bond yields in September 2022 exposed shortcomings in the resilience of LDI funds, as well as in some schemes’ operational processes. The consequent turbulence led to situations where pension fund assets were sold to meet LDI liquidity requirements and exacerbated wider market volatility.
At the time, we set out how we expect trustees to improve the resilience and governance of their LDI holdings. We are enhancing our data collection and we continue to work with our partners to monitor compliance with the standards we set out, and we will take coordinated action where risks emerge.
Economic uncertainty can undermine saver confidence and that is why we have emphasised to savers that pension schemes were not, and are not, at risk of collapse in the face of movements in the price of gilts.
Sponsoring employers’ ability to support their DB schemes
While in recent years corporate insolvencies among sponsoring employers of DB schemes have generally been low, we are mindful of the pressure that businesses are under and recognise that trends may reverse.
Overall, the funding position for schemes is much improved, largely driven by recent gilt yield increases. However, we remain concerned that some outliers do not currently have an appropriate funding target or have a target that is some way from being met.
Employers’ ability to meet their automatic enrolment (AE) duties and pay savers’ contributions
Despite the potential for economic strain to drive increases in employers’ non-compliance with their pension duties, we are yet to see this happen. Workers continue to be enrolled by their employers and have their contributions paid on time, and we remedy non-compliance where we need to. We are monitoring the impact of the challenging economic environment and will respond flexibly to any new or increased risks that emerge.
Poor decision-making
The decisions that are made on behalf of pension savers, or by savers themselves, can significantly affect the value and security of their pensions. There is potential for loss, for example, resulting from poor decisions about where money is invested or how it is accessed.
- Investments: Variation in investment performance can lead to large differences in outcomes. Pensions are complex and many savers do not interact with their scheme until they come to access their money.
- Pension scams: Against a backdrop of rising cost-of-living pressures, there is a heightened risk of savers being vulnerable to scams and mis-selling. Scammers continually evolve their methods and will seek to exploit the pressure that some savers feel to gain higher returns or to access their money quickly.
- Accessing a pension: The number of DC savers has grown significantly, but the availability of good decumulation products is currently limited and, faced with a complex decision, savers risk a loss of value — through costs and charges or a poor value decumulation vehicle.
These risks are significantly reduced where schemes have high standards of governance and trusteeship. This helps to ensure that savers get good value for their money and have access to clear and helpful information to inform their decisions. Where trustees do not display high standards, we expect swift improvements or for schemes to consolidate into an alternative, well-run scheme.
The number of DC schemes continues to reduce, with many consolidating into master trusts. Larger schemes often provide better value for money, for example through lower charges, better services and, potentially, better investment performance.
Our priorities
Our work for 2023 to 2024 is set out across our five strategic priorities:
Security
Our principal role is to protect pension savers. This means that people get the pension they are entitled to, that the correct contributions are paid, and that the promises made to DB savers are kept. It also means that savers are protected from scams.
To do this, the core of our work is a focus on ensuring compliance with the law. This includes:
- maximising employer compliance with automatic enrolment
- recovering missed pension contributions
- authorising and supervising DC master trusts
- assessing regulatory applications
- responding to employer- and scheme-related events via the notifiable events framework
- our enforcement, criminal and regulatory casework
In the coming year, we will place particular emphasis on protecting savers as we:
- supervise pension schemes and enforce the law where we need to
- prepare to implement the DB funding code and regulatory framework in April 2024, enhancing our ability to protect savers’ money
- monitor and address risks and events in the marketplace
- increase our focus on tackling scammers through the Pension Scams Action Group (PSAG)
- refine our AE operating model to be more targeted and efficient
Supervision
Supervision is a key part of our approach to regulation. It allows open and constructive dialogue and the early identification and mitigation of risks. In addition to the way we regulate DB, DC, master trusts, and public service schemes, we can now authorise and supervise collective defined contribution (CDC) schemes. This year we will continue to review any CDC applications and, once a scheme is authorised, we will ensure high standards are maintained through ongoing supervision.
Enhanced protection of DB pensions
Trustees are managing DB schemes in the context of high inflation, rising interest rates and slower economic growth. Although the overall DB funding position is much improved, we recognise that some schemes may be significantly underfunded, or high levels of unsupported investment risks remain, so protecting savers’ money is a key priority.
With schemes that are in a much-improved funding position, we will be encouraging relevant schemes to de-risk and lock-in the recent gains.
We are preparing to introduce a new funding code in 2024, which will establish a much stronger set of standards for DB schemes. A new requirement for trustees to set a long-term funding objective will help ensure that the promises made to savers are kept.
The code will make clear that schemes must reduce their reliance on their sponsoring employer as they become increasingly mature and manage risk effectively. Trustees also need the flexibility around funding to suit their individual circumstances, which the code will provide. The regulatory framework we build will enable us to act effectively where we need to.
Market stability
In October 2022, we issued a statement on liability-driven investments (LDI) and managing investment risk, then followed this up in November 2022 with guidance on maintaining an appropriate level of resilience in leveraged arrangements. We have called on trustees investing in leveraged LDI to improve their scheme’s operational governance.
We remain committed to working with stakeholders, including the Bank of England, Financial Conduct Authority (FCA), government, and the pensions industry to ensure that lessons are taken on board and savers remain protected.
Our ability to monitor and assess market risks relies upon good data, and this year we are bolstering our data and digital capabilities. We are considering what further data would enable greater oversight of schemes’ leveraged positions, and the best way of collecting that data. This may mean we seek to increase the amount of information we gather on a range of asset allocations, including LDI. We are committed to minimising burden and will assess costs versus burden as part of any request we make of schemes for more data.
Preventing and tackling pension scams
Pension scammers continually evolve their methods. With rising cost of living pressures, the threat posed by scammers increases as they prey on those who seek to access their savings or look for increased returns.
We have launched our strategy to combat pension scams. Through it, we will educate savers on the risk of scams, raise standards of scheme governance and administration which help prevent scams, and we will take robust action against scammers.
Our success relies on effective collaboration with other regulators and our partners in industry and law enforcement. We achieve this through the PSAG, formerly known as Project Bloom. This year, we will further develop this multi-agency capability, which will bolster the sharing of intelligence between partners and better co-ordinate disruption and enforcement activity. We must all play our part in disrupting and stopping scams, and we will continue our work with industry to drive schemes to comply with the pledge to combat pension scams and Pension Scams Industry Group (PSIG) Code principles.
Employers’ compliance with their pension duties
AE is firmly embedded and has brought millions of new savers into workplace pensions. Most employers willingly comply with their duties and pay the correct contributions into savers’ pension pots on time.
We support employers to meet their duties and act where they do not. Building on this success, this year we will start to deliver against our new AE operational strategy. This will secure a long-term, sustainable operation that maintains high levels of compliance and saver protection, but achieves this in a more targeted, efficient and effective way.
We also stand ready to develop and implement any requirements resulting from the 2017 AE review which included recommendations around extending access and contribution levels.
Key activities and milestones for 2023 to 2024
- Preparing for the launch of our DB funding code and regulatory framework in 2024.
- Improving how we monitor and assess market risks and events.
- Developing our relationship supervision team, including working with further administrators in Q1.
- Delivering year 2 of our pension scams strategy.
- Developing AE operations so they are more efficient and effective in the long term.
A look beyond 2023 to 2024
Ensuring DB savers get the money promised to them
We will transform our approach to protecting DB savers’ money. Our aim is to ensure that our DB funding code and our related communications mean that trustees know what to do and have a suitable long-term objectives. Proactive engagement from us will be targeted and risk-based.
Regulation will change: a new twin-track approach will drive both ‘fast track’ and ‘bespoke’ engagements with schemes and an enhanced, data-driven approach to monitoring funding risk.
Ensuring savers get the pension they are entitled to
Our aim is to lock-in the successes of AE and take a more targeted, risk-based approach while maintaining high levels of compliance.
This means that we will harness and embed the learning from work undertaken this year to test new regulatory approaches, further streamlining our compliance and enforcement activities.
Value for money
We are committed to enhancing the outcomes of the millions of DC savers whose pensions do not come with a promised retirement income. This means driving a long-term focus on value for money across the pensions sector, so savers can expect their money to be invested appropriately and to receive good services for reasonable costs and charges.
We regulate compliance with legal requirements, including adherence with the charge cap and the value for member regulations that came into force in October 2021.
Savers can expect us to drive good value for money as we:
- work with the FCA and DWP to deliver a value for money framework
- take regulatory action against schemes (eg where schemes do not undertake value for member assessments, or where unremedied shortcomings are revealed)
- step up our engagement with administration providers
Implementing a value for money framework
Following a period of consultation, a core priority for us this year is working with the DWP and FCA to progress a new value for money framework. The framework will enable schemes to shift their focus from purely cost to a more considered and holistic assessment of value for money.
The framework will require schemes to disclose clear and comparable metrics on their investment performance, costs and charges, and quality of services. This transparency will allow an effective and consistent comparison of pension schemes’ performance — driving competition and raising standards. Underperforming schemes will be required to take action to improve the value they provide to savers or encouraged to consolidate where this is in savers’ best interests.
A response to the consultation is due in the summer, and work will then begin on detailed policy development and implementation. This is likely to require legislative change.
Regulating value for member assessments
We are determined that savers should not receive poor value for money, and we will pursue high standards robustly across all schemes.
Since 1 October 2021, trustees of all relevant pension schemes, regardless of asset size, must calculate and state the return on investment from their default and self-select funds (net of transaction costs and charges). The annual chair’s statement must have this information recorded in it and it must be published online.
Our survey data shows that small schemes are often unaware of their regulatory duties. That is why we will start to identify smaller schemes that offer poor value and drive them to either improve their standards or consolidate into a scheme that offers good value for savers.
Engaging with scheme administrators
High quality, efficient administration underpins a well-run pension scheme and good value services. Over the last year, we have trialled a new approach to engaging with administrators and this year we are embedding this into our supervision team. This includes bringing two further administrators into the approach early in the financial year. Through this work, we aim to better understand the sector, identify areas where changes will improve savers’ outcomes, and ultimately raise standards.
Key activities and milestones for 2023 to 2024
- Contribute to the joint consultation response on the value for money framework — Q2.
- Develop a value for money policy with the FCA and DWP.
- Undertake a regulatory initiative on value for member assessments.
- Engage with administrators and increase engagement levels in Q1.
A look beyond 2023 to 2024
The value for money framework
We will drive up standards and drive out schemes that offer poor value. Our aim is a value for money framework that delivers transparency, enhances the value for money that savers get, and increases competition.
This means we will prioritise embedding the framework, working with industry and our partners to ensure it is effective in delivering our aim. The standards it will monitor across investment performance, costs and charges, and services will be clear and measurable. If underperforming schemes remain in the market, we will seek the mandating of remedial action and, if necessary, an enhancement of our regulatory powers.
Preventing loss of value when savers access their pensions
We will focus on ensuring that savers get good value and can make good decisions when it comes to taking their pension at retirement. Our aim is that schemes either offer, facilitate or signpost decumulation vehicles and services that provide savers with good value for money.
During the year, we will explore options for better protecting value at decumulation for DC savers and we will prioritise taking this work forward. This represents a broadening of our work and highlights our commitment to enhancing the value for money that savers receive.
Scrutiny of decision-making
The value and security that savers receive from their pensions depends upon good decisions being made. Many critical decisions are taken on behalf of savers, including decisions about which pension scheme to use, how money is invested, and how risks are managed. These can all have a significant bearing on savers’ outcomes.
We are committed to ensuring that decisions are fair and transparent and, where relevant, mitigate environmental and social risks. We believe that diverse and inclusive trustee boards make good decisions and, where savers take decisions themselves, it is important that they have access to helpful advice and guidance, so they can make the right decisions at the right time for their individual circumstances.
Those running occupational pension schemes must have an appropriate level of knowledge and understanding. Our trustee knowledge and understanding regime (TKU) provides trustees with the tools and guidance they need to undertake their role effectively. Where standards are not met, we can take regulatory action to ensure compliance with the law through the issue of improvement notices, penalty fines, or prohibiting an individual from acting as a trustee.
Savers can expect us to drive good decision-making as we:
- set clear expectations through our new general code
- take action on non-compliance with the Taskforce on Climate Related Disclosure (TCFD) requirements
- continue to deliver our EDI Strategy
- focus on preventing value loss where savers with DC pensions take their money on entering retirement
- continue our focus on climate change, refreshing our Climate Change Strategy
- establish a vision for the trustee landscape in a concentrated marketplace
The general code of practice
It is essential that our expectations of trustees and governing bodies are clear and easily identified, and this year we will launch a new general code of practice. We have sought and acted upon feedback about the best way to present this information, and the new code marks a step change in how we do this.
The code will bring together ten of our existing codes of practice into one content source on our website, which will be regularly updated. The new, topic-based modular format will make it easier for trustees and their boards to identify our expectations and assess the degree to which they are meeting them.
A well-run scheme is not likely to see any major impacts resulting from the new code, but all schemes should be clear about the standards they are expected to meet. We seek to drive high and consistent standards through our new general code, but where these are not met, the code will give us a clear starting point for regulatory engagement in a wider range of areas.
Retaining value when savers access their money
Around 1.5 million DC savers are estimated to be entering retirement over the coming five years, with a further sharp rise to follow.
Savers enter the system without having to take decisions but will later face difficult choices about how they access their savings. They risk loss of value through high costs and charges or the selection of a poor decumulation product.
We seek to enhance and protect savers’ outcomes at every stage of their pension consumer journey. This means that when savers come to access their money, they are supported to make the right decisions for them.
It is a priority that schemes understand how their savers are going to take their retirement funds. This year, as part of our focus on standards in governance and trusteeship, we will reinforce the importance of acting in savers’ best interests when facilitating their transition into decumulation.
We will work with the DWP and the FCA over the coming years to explore how the value for money framework may be broadened to include metrics for decumulation, laying the foundations for the future. Alongside this, we will support the DWP in developing its response to the call for evidence on helping savers understand their pension choices.
Improving trustee board equality, diversity, and inclusion
We firmly believe that diverse and inclusive trustee boards underpin effective and representative decision-making. We are entering the third year of our four-year EDI Strategy to embed EDI across our organisation and to understand the challenges and progress being made by those we regulate so we can help the industry to do the same.
We will establish a baseline of the diversity of schemes’ governing bodies and drive more diverse and inclusive decision-making.
We are supported by an industry working group, which has helped us design this initiative. The first output is EDI guidance for trustees and employers, published by the end of the last financial year. We will now engage with schemes through our supervisory work to understand the progress they are making, the challenges they face and to re-affirm our expectations. This will enable us to share and reinforce best practice.
Insights from the joint consultation into the consumer pensions journey completed with FCA are helping us to build an understanding of why pensions inequalities occur. For the upcoming year, we will utilise these findings alongside research from organisations such as the Pensions Policy Institute and Fair4All Finance to further inform our work in this area.
Climate change
We continue to deliver against our Climate Change Strategy launched in April 2021, which sets out our expectation of the changes we expect of industry by 2024 including the publication of disclosures. A new code of practice will include climate change and stewardship and will confirm our expectations of trustees in these areas.
Responding to the risks and opportunities arising from climate change remains a challenge for some trustees of pension schemes and their sponsoring employers. Trustees of certain schemes must ensure that the effects of climate change are addressed and incorporated into their governance practices. Some must also publish TCFD reports online within a set timeframe.
Trustees of certain schemes must set out in published statement of investment principles (SIP) their policies on stewardship and on environmental, social and governance considerations (including climate change) that they consider financially material. This includes reporting on how they have followed the policies set out in their SIP via an implementation statement (IS).
We have begun work to establish whether trustees of schemes with 100 or more savers have published both their SIP and IS. We will assess the quality of SIP and IS disclosures, using this not only to drive regulatory interventions but to also identify and share examples of best practice. This will inform the DWP’s planned review of regulations underpinning climate-related and stewardship disclosures, later in 2023.
The transition plan taskforce (TPT) was launched in April 2022 by HM Treasury to develop the ‘gold standard’ for private sector climate transition plans across the UK economy. We support both the work of the TPT and the use of transition plans and will continue to engage with the sector and fellow regulators as the work of the taskforce develops.
Trusteeship
Effective trustee decision-making is pivotal to achieving good outcomes for savers. Key activities this year — issuing the general code and regulatory initiatives on EDI and climate change — are significant steps forward in helping to drive high and consistent standards. However, we are determined to do all we can to ensure these standards are met.
Where we come across instances of poor practice, we will ensure standards in scheme governance through increased enforcement action. This may include expanding the circumstances where some of our powers, such as trustee appointments and prohibitions, may be used as well as testing some of the new powers we have been given under the Pension Schemes Act 2021.
We will also commence work to consider whether there should be a professional trustee on each trustee board, whether professional trustees should be accredited or whether we consider that there should be an authorisation process established for professional trustees. We will also continue to provide information, tools and guidance for trustees, employers and advisers to take effective decisions in the interests of the savers they represent
Key activities and milestones for 2023 to 2024
- Publishing our general code in Q1.
- Commencing our regulatory initiatives on EDI and climate change in Q1.
- Delivering a range of activities to support our commitment to climate change.
- Creating an option analysis on the future regulation of governance and trusteeship — Q4.
A look beyond 2023 to 2024
Standards of governance and trusteeship
We will ensure the highest standards of governance and trusteeship. Our aim is that our expectations are understood and embedded and that we have the regulatory tools to act decisively where standards are not met.
This year we are assessing options for driving up standards — for example through mandating that a professional trustee sits on each board or accrediting or authorising professional trustees. This will lay the foundations for working with the DWP to progress the most suitable approach, enabling a step change in our scrutiny of governance and trusteeship.
Embracing innovation
Innovation is central to driving progress in the pensions system — changes that meet savers’ needs, enhancing transparency, choice, value and security.
Embracing innovation means that savers will be able to better interact with their savings so they can understand their situations and make well-informed choices. It means that as the market innovates, savers can be confident that new models will meet their needs, providing the choice, value and security they are entitled to.
This year we will:
- assess and supervise DB superfunds coming to market
- assess any CDC applications for authorisation
- support schemes to prepare for connecting to pensions dashboards
- ensure trustees considering new models receive appropriate information and guidance
- consult with the DWP on the next stages for the regulation of CDC schemes
Superfunds and other alternative DB models
We continue to closely engage with those considering or developing new DB models, including superfunds. Our superfunds guidance, published in June 2020, details the principles that providers are expected to follow until legislation is in place. We will review this guidance to ensure it continues to deliver what the market needs.
Whilst we continue to supervise the superfund that passed our assessment in November 2021, the standards in our guidance remain applicable for any potential superfund seeking to enter the market. We intend to publish guidance on other DB models during the year.
Collective defined contribution schemes
CDC schemes offer a viable option to traditional DB and DC schemes and, since August 2022, potential CDC schemes can make an application that demonstrates to us how they meet the authorisation criteria. We stand ready to assess any applications and any schemes that are authorised will be subject to ongoing supervision.
In January 2023, the DWP launched a public consultation on extending opportunities for CDC schemes, seeking views on policy proposals for broadening CDC provision beyond single or connected employer schemes to accommodate multi-employer schemes. This consultation concluded in March 2023 and the response will be published on the GOV.UK website. Following this, we will assess the implications for our approach to regulation and operational delivery, including estimating the potential number of applications, and producing a revised code and guidance.
Pensions dashboards
Millions of people moving between jobs may have to keep track of multiple pension pots. Pensions dashboards will allow savers to view information about their pensions, including their state pension, in one place, online. This will provide information about savings that savers may have struggled to find and understand previously, help identify ‘lost’ pension pots, and aid retirement planning.
Schemes have much to do to get ready, in particular making sure that their data is robust, and we will continue to help them to prepare.
Key activities and milestones for 2023 to 2024
- Reviewing our DB superfunds guidance.
- Assessing authorisation applications for DB superfunds and CDC schemes, and carrying out ongoing scheme supervision.
- Helping the pensions industry to prepare for pensions dashboards.
A look beyond 2023 to 2024
New scheme models
We will ensure that new scheme models meet savers’ needs. Our aim is that new models are secure, offer value, and are underpinned by a robust regulatory regime.
Our focus will be on delivering new regimes for the assessment, authorisation and supervision of new models, such as DB superfunds and CDC schemes, so savers can be confident in the vehicles they use to save for retirement.
Pensions dashboards
We will continue to help schemes to prepare for dashboards, setting out the steps they should be taking. We will put in place a framework that will enable us to swiftly act where duties are not met, and we will work with schemes to achieve these requirements.
Bold and effective regulation
As the world around us changes, so do we; striving to deliver improvements in everything we do, year-on-year.
To achieve the outcomes that we seek for savers, we must be bold in our approach and demonstrably effective. We want to make sure that a coherent and aligned regulatory framework delivers clarity, simplicity, and a reduced burden to the benefit of industry, employers and all savers. And in doing this we must provide good value for money.
We will continue to invest to maintain and develop our technology solutions as a significant enabler of our regulatory effectiveness.
We manage an ongoing and significant portfolio of change projects, ranging from implementing government legislation, to internal IT services, to our People and Culture programme. Many projects move from design into delivery phase during the coming year. In addition to this work, we will:
- continue with our programme of work supporting our evolution across the next 5 to 10 years, based upon the shape of the future pensions landscape
- continue the pilot to improve our ability to assess the value for money that we provide, using the National Audit Office (NAO) framework
- build a significant data, digital and technology capability
- continue to meet our commitments under greening government standards and our climate change agenda
The bridge to years 5 and 10 of our strategy
In our Corporate Strategy, we commit to transforming the way we regulate so we can deliver on our commitment to savers in a rapidly changing landscape. To do this, we have set a vison for the evolution of our operating model:
- Capabilities: we are fit for the marketplace we regulate, with a data-driven, innovative approach supported by good technology.
- Processes: we have efficient processes that deliver good value for money.
- People and skills: we have the right people with the right skills for our evolved regulatory approach
- Partnerships: we collaborate with key partners and stakeholders to deliver good saver outcomes.
We have set up five workstreams to deliver this vision. This programme will ensure that we are able to deliver against our strategy in the medium to long-term, maintaining our focus on enhancing and protecting savers’ outcomes.
The value for money we provide
We are using the NAO’s ‘4 Es’ assessment framework to help us gauge and drive improvements in the value for money that we provide. This centres on economy (the money we spend), efficiency (how well the money delivers outputs), effectiveness (the impact of our outputs) and equality (the achievement of good outcomes for all groups of savers).
We are applying the framework on a test and learn basis across the following areas:
- tracking spend across different scheme types
- tracking spend across our ‘back office’ functions, identifying efficiencies
- embedding the framework within our critical assessment processes, for example business case creation and within our people and culture programme
- exploring how we collect data that assesses the value for money delivered through each Corporate Plan
An ability to measure our value for money over time forms one pillar of our corporate performance, alongside our corporate measurement framework. This helps us evidence how we are delivering progress towards our saver outcomes under our Corporate Strategy.
Digital, data and technology
A priority for the coming year is the development and embedding of our data, digital and technology directorate (DDaT) so that we:
- capture, manage and analyse a range of data, making effective use of that analysis to inform and enable our work
- provide enhanced digital services, making it easy for advisers, trustees, employers and administrators to engage with us and fulfil their regulatory obligations
- develop the platforms and products that enable the above
Our digital service delivery programme will manage this work, which will be user-centric and service-led.
Net zero
We have a 2030 net zero carbon emissions target. We will demonstrate that we are on track to make this transition, including setting out our plans to achieve our 2030 target by 2024.
This year, we are relocating to a new office in Brighton, leasing space in a shared tenancy building. Sustainability considerations underpin all stages of the design and implementation process and we have undertaken an environmental assessment of this work. We will determine our scope 1 and 2 emissions (broadly, natural gas and electricity consumption) and work to capture our scope 3 emissions (broadly, upstream and downstream supply chain). This will help inform our trajectory to net zero by 2030.
A key part of delivering on our net zero target will be to ensure our team are confident in talking about climate change. This year, we will roll out carbon literacy training.
Key activities and milestones for 2023 to 2024
- Delivering our supervision strategy in Q1.
- Delivering against our AE operational strategy.
- Completing our internal value for money pilot and set out recommendations.
- Embedding our DDaT directorate.
- Net zero plan in Q4.
A look beyond 2023 to 2024
The way that we regulate will continue to reflect the long-term course set by our strategy. We will keep our operation under review to ensure that we understand and respond to risks and opportunities and that we continually improve in what we do. This includes having the right people focused on the right things within an organisation that operates as efficiently and effectively as possible.
Digital, data and technology
We will be digitally enabled and data-driven. Our aim is advanced, integrated platforms for engaging with our regulated community, the capture and analysis of data, and for streamlining operational delivery.
Our approach to supervision
As the market evolves alongside our remit and focus, so will our approach to regulation. We will supervise our regulated community effectively. Our aim is risk-based, supportive and robust supervision of a concentrated marketplace. We will continue to enhance and refine our approach, in tandem with enhancing our tools and capabilities, so that we engage effectively with all of those that we regulate, always with the aim of enhancing and protecting savers’ pensions.
Our partnerships
Working in collaboration with our partners and stakeholders is fundamental to our success and to a coherent and aligned regulatory system. We will continue to identify and develop opportunities for enhanced collaboration across the regulatory family and beyond.
Our people
People and Culture Strategy
Our People and Culture programme is designed around how our organisation, people, leadership and culture will develop across nine key areas to adapt to the shifting pensions landscape and the resulting people-related demands that we have as an organisation, and to ensure we are ready for the future. We aim to attract and retain the best people and build a culture where everyone has what they need to thrive and do their best work. Alongside the programme, we continue to recruit key roles for the delivery of our core activities. The market currently presents recruitment challenges for certain roles and we are managing our recruitment plans accordingly.
Equality, diversity and inclusion
We launched our Equality, Diversity and Inclusion (EDI) Strategy in June 2021 with three strategic objectives focused on our role as an employer, regulator, and prominent voice within the pensions industry.
We are committed to leading by example and to building a diverse workforce, promoting fair and inclusive employment practices throughout our recruitment, talent, performance management and retention processes. We are also developing an enhanced learning and development offering for all our employees. This will help ensure our people have the skills and knowledge required to do their jobs — including exercising their public sector equality duty to identify, assess and take the appropriate action to manage EDI risks and opportunities within TPR.
Financial summary
Funding
Our funding derives from two sources: a grant-in-aid from the DWP, which is recoverable from a scheme levy relating to Pensions Act 2004 duties, and a separate grant-in-aid from general taxation relating to the automatic enrolment programme arising from Pensions Act 2008.
The funding agreed for 2023 to 2024 is £118.9 million. This excludes the 2023 to 2024 pay remit which is subject to agreement.
2023 to 2024 budget
The total 2023 to 2024 budget of £118.9 million is an increase of £1.7 million against the 2022 to 2023 budget, a £1.6 million increase for levy and a £0.1 million increase for automatic enrolment.
The levy increase is down to increased spend on specific initiatives such as PSAG, CDC, climate change and planned expenditure to deliver against the accommodation strategy. The AE budget is broadly in line with the 2022 to 2023 budget.
| £Ms | 2022 to 2023 budget | 2023 to 2024 budget |
|---|---|---|
| Levy | 74.8 | 76.4 |
| Automatic enrolment | 42.4 | 42.5 |
| Total | 117.2 | 118.9 |
We will continue to support and work with the DWP in its review of the pensions general levy.
Average payroll staff numbers
The payroll staff growth rate for 2023 to 2024 is anticipated to be in line with staff growth rate achieved in 2022 to 2023, mainly to support our portfolio and other specific initiatives as above.
| 2022 to 2023 actual | 2023 to 2024 budget | |
|---|---|---|
| Levy | 596 | 661 |
| Automatic enrolment | 294 | 319 |
| Total | 890 | 980 |
Measuring our progress
Our Corporate Strategy sets out our commitment to pension savers and we have defined the saver outcomes that we want to achieve. Last year, we reviewed and updated our performance measurement framework to align it with these outcomes, providing a clear line of sight between our strategic ambitions and how we evaluate our work and its impact.
Our key outcome indicators (KOIs) are long-term measures that allow us to track our progress towards the saver outcomes over time.
We also set and monitor key performance indicators, which are annual measures of performance against prioritised activities.
Both our outcome and performance measures (KOIs and KPIs) are underpinned by our value for money framework, which is based on the National Audit Office’s 4Es framework, by showing that we are efficient (by completing activities on time and within budget) and effective (by delivering the saver outcomes we strive for in the long term).
Our key outcome indicators are:
| Strategic priority | Key outcome indicator |
|---|---|
| Security | DC savers get the pensions they are entitled to because a high proportion of eligible workers are saving into qualifying schemes. |
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Regulation of the master trust market as it evolves ensures that savers receive their pensions because:
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| DB savers’ money is more secure because schemes are appropriately funded and carry an acceptable level of risk and volatility. |
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Savers are being actively protected from scammers because:
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| Value for money |
We drive improvements in the value for money savers receive because TPR and trustees know whether schemes represent good value and trustees take appropriate action as a result of carrying out the value for members assessment. |
| A common value for money assessment framework improves understanding and comparisons of value which ultimately drives improvements in value for money for savers. |
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| Improvements in data quality and automation, including as a result of preparations for pensions dashboards, drive improved services for savers. |
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| Decision making |
We monitor the proportion of savers in schemes that demonstrate good governance and take mitigating action where savers’ exposure to risks caused by poor governance is too high. |
| By driving trustee action on the risks and opportunities from climate change and in line with our Climate Change Strategy, we help ensure the management of savers’ money takes account of environmental and social outcomes. | |
We develop enhanced understanding of the challenges faced by trustee boards in broadening the diversity of their makeup, working with industry to ensure that diverse and inclusive trustee boards make good decisions for savers by:
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| Effective implementation of the new DB funding code will increase awareness and understanding of what is expected of trustees when approaching funding and investment, which will drive intention to comply with our expectations on long-term planning and risk management. |
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| By bringing information into one place, pensions dashboards support savers in making the most of advice and guidance. |
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| Innovation | We authorise any CDC schemes which meet legislative quality criteria and supervise them on an ongoing basis to protect savers’ benefits in the longer term. |
| DB savers get the money promised to them because we ensure that active superfunds operate at an appropriate standard now and in future and we review trustees’ decision-making around transfer to a superfund. |
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| As pensions dashboards go live, more savers better interact with their savings and begin to be reunited with lost pots. |
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| Bold and effective regulation |
Savers get improved value for money from TPR as demonstrated through our internal value metrics. |
| Our people increasingly drive and deliver bold and effective regulation because of the shifts made through our People and Culture Strategy in relation to our people and organisation, our leadership, and our culture. |
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| Savers get better value for money from TPR because digital, data and technology improves both our regulatory and operational activities. |
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| We are reducing our environmental impact, evidencing progress against the greening government commitments and the objectives in our climate change strategy, and we are improving the sustainability of our operations. We set a 2030 net zero carbon emissions target for TPR and in 2024 we will set out our plans to achieve this. |