Ian highlights that the strategy does not have substantive changes to regulation, however it paves the way for a joined-up approach to pension regulation in the future and the next step needs to be something similar for legislative changes. Meanwhile, the two new initiatives: the review into the customer journey and work to develop a set of standards for value for money are sensible steps.
“The prospect of widespread pensioner poverty is a recurring nightmare for the regulators as reams of figures show a population struggling to navigate the pension landscape.
“For a number of years there has been an onslaught of pensions regulation and legislation and there is a growing sense of fatigue over continually tinkering from all sides. The overall theme of The Pensions Regulator and the FCA joining forces for a more coordinated and holistic approach to pension regulation can only be a good thing.
“But is this a marriage of equals? Unlikely. As defined benefit provision declines and more people become self-employed, more responsibility for regulating pensions and ensuring good outcomes will fall under the FCA, who already have a bigger budget and resource than TPR.
“The joint strategy issued by the two groups is not a game changer in terms of action points, but it is in terms of setting them on a path of being a combined front. Which offers the public and the industry a glimmer of hope for future stability in the pensions arena. Something the Chancellor needs to be mindful of before interfering with pensions in his budget.
“There has been a desire for a long time for pension policy to be handled independently of Government in a similar way to how the Bank of England sets interest rates. If TPR and the FCA are able to agree a joint strategy, this is a stepping stone in the right direction to that end. The next step is for DWP and HMT to have a joint pension strategy and for all pension legislatives changes (including tax changes) to be set via joint consultation.
“The two regulators make a point that their power has its limits and challenges remain around certain pension initiatives and how to improve them, such as the pensions dashboard and the single financial guidance body. However, they take the opportunity to highlight two new initiatives: a review into customer communications and clarifying the meaning of value for money.
“The review into the consumer journey has potential to help the industry ensure its communications are effective. We hope that, along with information gathering, the regulators will help provide a template for a simplified annual statement as the power of simplicity cannot be overestimated.
“The term value for money is ambiguous and means different things to different people. However, the industry is under increasing pressure to measure it. Having a set of common principles and standards will be particularly welcome to Independent Governance Committees.”