More news from the Pensions Regulator

The Regulator has been vocal on several aspects of pensions administration in recent weeks: data improvements ahead of the dashboard launch; a planned extension to its regulatory approach to professional trustee firms; targeting continuing improvement on ESG matters; and an outline of risk-based regulation are some of the matters it has commented on this month.

Dashboard data improvements – the Regulator begun to contact pension schemes calling on them to improve data quality ahead of the launch of the pensions dashboards. The Regulator says that the new pensions dashboards duties mean schemes must have robust controls around their data. The Regulator intends to engage with schemes fall under the pensions dashboards scope, asking them to account for how they are monitoring and improving the quality of their member data.

Professional trustees – on October 16, 2024, the Regulator announced that there are plans to extend its regulatory approach to professional trustee firms, and to form new relationships with the ten largest professional trustee firms before Christmas. 

A blog published on October 18, 2024, details that the new approach will focus on understanding how professional trustees’ businesses work, the risks and opportunities involved and any perceived or actual conflicts. Once an initial “discovery phase” is complete, the Regulator will feed any insights back into the market. Rather than simply targeting trustees when areas of risk are discovered, the Regulator is rebranding its supervisory approach to engage directly with professional trustee firms rather than individuals, as it did previously. 

How risk-based regulation affects pensions  industry and savers – Also in its blog of October 18, 2024, the Regulator has outlined how its move towards risk-based regulation will affect the pensions industry and savers. The Regulator has plans to create an innovation hub to help the industry test new models and approaches from a regulatory standpoint. 

On the future of the Regulator’s risk-based approach, it says that greater engagement will enable evidence-gathering so that it can prioritise its efforts to tackle risks and foster product innovation.

Trustees’ environmental, social and governance compliance – in a blog published on October 14, 2024, the Regulator announced new ESG-related resources for pension trustees as it targets continuous improvement in trustees’ related decision-making.

The development follows a review conducted by the Regulator in July 2024 which found that while trustees were largely meeting statutory ESG disclosure requirements, many schemes were adopting a "minimum compliance" approach. 

The Regulator’s view is that this is insufficient and it intends to "look more broadly at investment governance practice and decision-making including around ESG" and "constructively challenge trustees' decision-making". 

The new ESG-related material has been collated in a new landing page online and the relevant content in the trustee toolkit is being updated.