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Regulator calls on public service schemes to raise standards

Ref: PN15-52
Thursday 10 December 2015

The Pensions Regulator has warned public service pension schemes to improve their standards of governance as new figures suggest that despite progress being made, less than a third have a plan of action to ensure they are meeting their new legal duties.

The figures come from a survey published today by the regulator.

While nine in ten respondent schemes have made progress in establishing a pension board, only 28% of schemes have a plan in place and are addressing key issues to ensure they comply with the requirements introduced by the Public Service Pensions Act 2013.

Andrew Warwick-Thompson, Executive Director at The Pensions Regulator, said: "While there has been some encouraging progress, our research reveals a concerning picture of some public service schemes failing to engage fully with the requirements on governance and administration.

"We recognise that the reforms are significant and those involved with public service schemes face complex and challenging conditions. However, schemes must comply with the law to ensure that the right benefits are paid to the right person at the right time.

"We expect all schemes to assess themselves against the legal requirements and the standards set out in our code, and to take action to address any gaps.

"We are supporting schemes to help them understand and embed the code. We have produced specific guidance through online education tools and e-learning modules, and we’ll also be launching a self-assessment tool in the new year."

The survey assessed what schemes are doing to meet the requirements, and also the standard to which they are being run. It can be viewed on the regulator’s website as part of the public service governance and administration research.

The survey indicates that some schemes are slow, or have yet to take action, in key governance and administration areas including record-keeping.

However, schemes report good progress in terms of setting up processes.

The key findings of the survey include:

  • While over 9 in 10 respondent schemes have established a pension board, only 28% of schemes have a plan in place and are addressing key issues to ensure compliance with the requirements introduced by the Public Service Pensions Act 2013 (NI 2014).
  • 44% have reviewed their scheme against the practical guidance and standards set out in the regulator’s code of practice for public service pension schemes.
  • 45% of schemes have measured themselves against the requirements of the record-keeping regulations, and so far only 27% have as a result undertaken a data cleansing exercise.
  • Generally there were high levels of reported processes in place against the majority of areas in the regulator’s code of practice.

Mr Warwick-Thompson added: "The survey helps us understand how schemes are doing and focus our priorities. We will be engaging further with those schemes who did not participate in the survey to ensure that their lack of engagement does not reflect a lack of compliance, we expect all schemes to respond to our requests for information.

"We will check on schemes next spring, and we expect them to have made significant progress."

Editor's notes

  1. The Public Service Pensions Act 2013 (NI 2014) introduced new requirements for the governance and administration of public service pension schemes. In January 2015, the regulator published its draft code of practice for public service schemes which sets out the standards it expects of the schemes, alongside some practical guidance. The code came into force on 1 April 2015, when the regulator commenced its expanded role to regulate these schemes.
  2. Public service pension schemes are pension schemes established by statute and are the responsibility of their respective government departments. They provide pensions for civil servants, the judiciary, local government workers, teachers, health service workers, fire and rescue workers, members of police forces, and the armed forces. The schemes have over 13 million memberships, with approximately 28,000 participating employers spanning the public, private and third sectors.
  3. The code relates to public service pension schemes established under the Public Service Pensions Act, 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.
  4. In July to September 2015 the regulator conducted a survey of all public service schemes, in order to assess how public service schemes are meeting the governance and administration legal requirements of the Public Service Pensions Act 2013 (NI 2014) and the standard to which they are being run.
  5. Participation in the survey was voluntary with 48% of schemes responding. This translates to 85% of the total membership of public service schemes and provides a good overview of the public service landscape.
  6. The survey we conducted over the summer considered ten areas, including those set out in our code of practice:
    • action – activity undertaken to ensure compliance with the new requirements
    • knowledge and understanding required by pension board members
    • pension board members – conflicts of interest and representation
    • publishing information about schemes
    • internal controls
    • scheme record-keeping
    • maintaining contributions
    • providing information to members
    • internal dispute resolution
    • reporting breaches
  7. The regulator’s enforcement options range from statutory compliance notices and monetary penalties, to criminal prosecution in some cases. Further details can be found in the regulator’s regulatory strategy and compliance and enforcement policy.
  8. 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

Tim Marks

01273 662092