The Pensions Regulator has asked the government for delegated rule-making powers, in a letter containing its pledges to support GDP growth through regulatory changes. Elsewhere, TPR said it will increase trustee compliance activity “to get low quality trustees out of the market”.

The letter TPR's chief executive Nausicaa Delfas wrote to the government contains details of how the regulator will support the government’s aim of driving growth, including by revisiting the reserving requirement for master trusts, as announced by the Treasury earlier this month.
   

   

However, it ends with the regulator in turn listing its own requests to the government, which are:  

 
The Pensions Regulator cannot make its own rules, like the Financial Conduct Authority can. For any changes in the trust-based pensions framework, the Department for Work and Pensions needs to legislate, making such changes dependent on parliamentary timeframes, political events and the individuals in charge at the DWP. 

TPR has long wanted rule-making powers, but ministers are typically unwilling to reduce their own influence over pensions. With the current government looking closely at where pension funds allocate, it seems unlikely that the government would agree to giving away rule-making powers over pensions. 

The DWP did not comment specifically on delegating some of its power to TPR.  

 

A spokesperson told mallowstreet: “Creating wealth and driving growth is at the heart of our Plan for Change. We are determined to ensure that tomorrow’s pensioners are supported, which is why the government announced the landmark two-stage Pensions Review and why the pension schemes bill was in the King’s Speech. The interim report of the first phase was published at the Mansion House event on 14 November and the final report will be published in the spring. Government will set out more details on the second phase in due course.”  

TPR's letter to the prime minister, chancellor and business secretary lists numerous ongoing and upcoming initiatives to show its alignment with Labour's growth agenda. 

Among others, it wants trustees to have the capability of considering and accessing investments that generate growth and will therefore develop a strategy this year to raise standards of trusteeship.  

“We will back this by engaging with the market to understand the investment decisions schemes are making and extend our supervisory grip over wider actors in the pensions ecosystem who have an influence on outcomes including professional trustee firms,” Delfas wrote. “As part of this we will also generate a diagnostic of risk areas and step up our compliance activity to get low quality trustees out of the market.” 

mallowstreet understands TPR will give a further update on this work in the very near future. 

As part of the push to get schemes investing in ‘productive finance’, the regulator has also pledged to help government understand “the kinds of growth opportunities that UK pension schemes will find attractive to invest in”, producing a report and sharing data. 

 

Its position means it can engage with schemes and the commercial sector “to understand, and then to articulate within government, the profile of assets that would align best with the investment objectives of the various types of pension funds", Delfas said. 

"This would help in identifying the ‘latent demand’ from the pensions sector in terms of the type, duration, equity/debt profile, investment size, etc that schemes would find most attractive, for example for UK infrastructure investment," she wrote.

 

As part of this, the regulator will seek to gain a better understanding of “any perceived tensions between trustees’ fiduciary duty and longer-term investment in the transition to a climate resilient, nature positive and net zero economy”.