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Improving standards central to public service pension schemes compliance and enforcement policy

Ref: PN15-25
Thursday 4 June 2015

The Pensions Regulator today published its latest policy to help deliver improved outcomes for more than 13 million members of public service pension schemes.

In April this year, we published a code of practice and regulatory strategy to educate and enable scheme managers and pension board members to comply with new governance and administration legislation.

Today we have issued an additional policy which details how we will work with schemes to help them to comply with the new legislation, and how if necessary we will use our enforcement powers where schemes do not comply.

To view the policy go to compliance and enforcement policy for public service pension schemes.

We have an expanded role to regulate more than 200 public service schemes with assets of £226 billion in relation to the new governance and administration requirements.

We recognise the importance of good governance and administration, such as accurate record-keeping, in order to deliver the correct retirement savings to members of public service pension schemes. Equally, those responsible for these schemes should be able to rely on accurate data to properly calculate the cost of pensions.

Andrew Warwick-Thompson, our executive director for DC and public service pension schemes, said:

“Our new code of practice is designed to help public service scheme managers and pension boards comply with the law and deliver the high standards of governance and administration that we expect of them, and which are vital to ensure members receive the benefits they are owed, at the right time.

“We recognise that the reforms are significant and those involved with public service schemes face complex and challenging conditions and so we are working with them to help them to understand and embed the code. There may be some scheme managers and pension board members who will fail to comply with the duties because they have not fully understood them. In these cases, we will focus on working with schemes in the early stages of the new regulatory regime to help them become compliant. We have produced specific guidance through online education tools including e-learning modules.

“However, in situations where schemes do not fulfil their responsibilities to address non-compliance with the law, we will consider our enforcement options.”

Over the next 12 months, we intend to reinforce and reflect our expectations for public service pension schemes in the material we publish. This will take into account our ongoing work to understand the key areas of risk in public service schemes through the intelligence we gather in our regulatory activities.

We plan to carry out a governance and administration survey this summer to assess current standards and to monitor improvements year on year. In due course, thematic reviews will be undertaken, focusing on key risk areas, to gather information and report back to the regulated community on best practice.

The final version of the compliance and enforcement policy has been published following a period of consultation.

To help scheme managers and pension boards navigate and embed the code, we have developed a new public service section of our website and published an essential guide to the public service code (PDF, 46kb, 8 pages).

Editor's notes

  1. There are 21 new or reformed public service schemes – 16 schemes are centrally administered and five schemes are locally administered which break down into a further 197 sub schemes (the local government schemes for England and Wales, and Scotland; the firefighter schemes for England and Wales; and the police scheme for England and Wales), which together total over 200 schemes / sub-schemes. There are also the connected schemes (broadly, the legacy schemes).
  2. The regulator received 11 responses to its consultation on its compliance and enforcement policy from a range of stakeholder groups, including local administering authorities and pension boards for public service pension schemes, government departments, representative bodies, advisors and consultancies.
  3. The consultation responses were generally very positive about our approach and we amended the policy in relation to the following themes:
    • a request for more information about:
      • our educating and enabling activities
      • our information gathering activities
      • our risk assessment process and criteria
      • investigations and sanctions
    • expectations of scheme managers and pension boards – the timing and process for identifying issues, developing a plan and implementing that plan
    • participating employers – our expectations and activities in respect of employers
    • costs and burdens – concerns about the duplication of requests for information or requirements for evidence to be recorded in different formats
    • scheme-specific guidance and a tailored approach – how we will work with funded and unfunded schemes
  4. The regulator’s enforcement options range from statutory compliance notices and monetary penalties, to criminal prosecution in some cases.
  5. The Public Service Pensions Act 2013 and Public Service Pensions Act (Northern Ireland) 2014 introduce the framework for the governance and administration of public service pension schemes and provides for extended regulatory oversight by The Pensions Regulator. The regulator will regulate 21 new / reformed public service  pension schemes along with the connected schemes (broadly, the legacy schemes).
  6. The code of practice, regulatory strategy and compliance and enforcement policy relate to public service pension schemes established under the Public Service Pensions Acts, (which are those principally covering civil servants, the judiciary, local government workers, teachers, health service workers, fire and rescue workers and members of police and armed forces), new public body pension schemes and to other statutory pension schemes which are connected to those schemes. It does not apply to schemes in the wider public sector.
  7. The Pensions Regulator is the regulator of work-based pension schemes in the UK. We have objectives to: protect members’ benefits; reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

Press contacts

Matt Adams 01273 662086
Out of hours 01273 648496

www.thepensionsregulator.gov.uk

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