The Pensions Regulator publishes annual report

The Pensions Regulator today published its first annual report and accounts for the financial year 2005/2006.

Since launching in April 2005, the Pensions Regulator has made significant progress in its initial 12 months of operation, whilst working closely with key organisations in the pensions industry.

During an exceptionally busy year the regulator has responded to a series of complex issues. Notable achievements include:

• publishing a medium term strategy which establishes the Pensions Regulator's active, risk-based approach to regulation;
• setting up a clearance process for businesses involved in corporate transactions;
• publishing guidance and codes of practice; and
• launching a free online trustee training toolkit.

Under the Pensions Act 2004, the regulator was also tasked with setting out its approach to ensuring that pension schemes had prudent funding targets and recovery plans in place. Following a consultation exercise a regulatory statement on scheme funding was issued in May 2006.

Via the voluntary clearance process, companies considering corporate transactions where there is an underfunded defined benefit pension scheme can apply to the regulator for a clearance statement. Guidance on the clearance process was issued in April 2005 and updated during the year. During the 12 months until the end of March 2006, the regulator had received 330 clearance applications, issued 148 clearance approvals, and refused just two.

Other key facts and figures for the 2005/2006 period include:

• 391 notifiable events reported to the regulator;
• 54 trustees appointed to the regulator's trustee register;
• 75 independent trustees appointed by the regulator to schemes with a total value of approx £1bn; and
• 43,000 calls received by the regulator's customer support centre.

Reflecting on performance so far, the Pensions Regulator's chief executive Tony Hobman said: "A year of intense transition has given the regulator a strong platform on which to build for the future. We have consulted extensively with our colleagues in the regulated community on all aspects of our work from scheme funding to codes of practice, actively engaging in dialogue with various industry bodies.

"We fully recognise the front line role that trustees play in the protection of members benefit and our interactive e-learning programme will provide them with further practical support. Raising standards of governance, particularly in smaller schemes, remains an important focus for our work in 2006."

Hobman added: "We know that much more needs to be done in the coming year but we welcome the prospect of reinforcing a risk-based yet flexible approach to the regulation of occupational pensions."

The Pensions Regulator's chairman David Norgrove concluded: "We aim to follow the principles of better regulation, working in a risk-based way. We also want to go with the grain of the markets, because pension deficits will best be tackled through market pressures alongside the work of trustees and managements.

"Overall our assessment of progress is: so far so good. The more gloomy predictions by some commentators have not come to pass and progress is being made to tackle issues surrounding work-based pensions."

To view the annual report visit: www.thepensionsregulator.gov.uk/pdf/AR20052006.pdf

1. Reporting notifiable events is a framework designed to reduce the risk of calls on the Pension Protection Fund by acting as an early warning system of possible problems with a pension scheme or an employer.
2. The trustee register is compiled by the regulator and lists professional trustees from which it can make professional trustee appointments.
3. The customer support centre handles queries from the industry about occupational pension schemes. The regulator's customers include trustees, actuaries, auditors and administrators. The regulator's website received 782,600 hits in the first year.
4. The clearance process gives assurance that the transaction does not contravene anti-avoidance legislation and that the regulator will not use its anti-avoidance powers in relation to the transaction once it is completed.
5. The trustee toolkit is a free, practical and interactive online training programme designed to improve trustees' knowledge and understanding to help them meet statutory requirements. Log on to www.trusteetoolkit.com for more information.
6. The Pensions Regulator is the regulator of work-based pensions in the UK, with wide ranging and flexible powers under the Pensions Act 2004.
7. The powers of the Pensions Regulator include the ability to:
   • collect more detailed scheme information;
   • issue improvement notices and third party notices, enabling the regulator to ensure problems are put right;
   • freeze a scheme that is at risk, while the regulator investigates; and
   • prohibit trustees who are judged not fit and proper to carry out their duties.

   The Pensions Act 2004 also imposes a statutory obligation on 'whistleblowers' to report suspected breaches of the legislation to the regulator.

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