Corporate Plan

Corporate Plan

Contents

The Pensions Regulator The Corporate Plan

Other public bodies concerned with pensions

Regulatory approach 12

Statutory objectives Risk

Educate, enable, enforce Key audiences

Making complaints Performance evaluation

The pensions landscape: issues and risks 18 Landscape

Issues and risks

Strategic plan 2014-2017 26

Corporate priorities:

To promote good governance and administration of work-based pension schemes

To promote security and good outcomes for members of work-based pension schemes

To promote employer compliance with their pension responsibilities To improve our organisational efficiency and effectiveness

Business plan 2014-2015 41

Workload assumptions Key performance indicators Resource summary

Appendix 1: Risk appetite statement 56

Foreword

As the government makes firm progress implementing the pension reforms around automatic enrolment, and through new proposals on quality standards, automatic transfers and decumulation, the work-based pensions landscape continues to evolve. Many of these new initiatives will have implications for our role and the way in which we carry out our duties.

Since The Pensions Regulator (the regulator) was established almost a decade ago, our core remit to protect the benefits of members of work-based pension schemes and to reduce risks to the Pension Protection Fund (PPF) has been steadily augmented. In 2008 we were given responsibility for applying the automatic enrolment programme to over 1 million employers and, from April 2015, we will have additional duties in respect of the governance and administration of public service pension schemes1

1

In this Corporate Plan, the term ‘public service pension scheme’ refers to the schemes established under the Public Service Pensions Act 2013 and the Public Service Pensions Act (Northern Ireland) 2014. Although public service schemes are established as DB schemes primarily, references to DB schemes in this plan refer to private trust-based DB schemes only.

.

This year, we expect to acquire a new statutory objective in relation to defined benefit (DB) scheme funding. The new objective makes it explicit that our approach to regulating DB funding should seek to minimise any adverse impact on employers’ sustainable growth plans while balancing the requirements of our existing objectives. Our revised DB code of practice and funding policy, to be published later this year, will set out how we will incorporate the new objective into our regulatory approach. In particular, we will encourage trustees and employers to work collaboratively to use the flexibilities in the system appropriately to best suit the needs of both the scheme and sponsor.

Viewed collectively, these developments have added significantly to the complexity and scope of our role, and inevitably have an impact on our approach. The wide-ranging focus areas are all at different stages of maturity – extending from initial policy development through to case management and policy review. Therefore, our new responsibilities have not only increased the breadth of our task, they have also generated the need for us to engage with an increasingly diverse audience.

Our central focus remains the application of our operational approach to educate and enable those with pension responsibilities, such as trustees and now employers, and only where appropriate to undertake enforcement action. As a risk-based regulator, we formulate our strategy and allocate our resources based on an assessment of the risks to achieving our statutory objectives. Our role is not to address every issue or to eliminate all risks to work-based pension schemes, but to strategically select cases and mitigate risks where our intervention will

Foreword

We are changing the cadence of our engagement across the range of our work to be proactive rather than reactive, to provide an authoritative voice and to share our knowledge and expertise in ways that promote better outcomes. The recent publication of our research into the costs of administering DB schemes to help trustees and employers compare the efficiency of their schemes among peers is an example of this.

We plan to undertake a similar study later this year in respect of defined contribution (DC) schemes. We intend to place greater store in activities that help those with pension responsibilities to ask the right questions and so help themselves to do the right thing.

Importantly, looking ahead and as we mature as an organisation, we intend to place an increased emphasis on our organisational efficiency and effectiveness. We will also review the way in which we operate, including the timing of our interventions and the way we measure our performance. As this plan will demonstrate, we are starting a journey to ensure that the measurement of our actions clearly relates to the achievement of the right long-term outcomes.

The three years of this plan will cover our next public body triennial review and the Department for Work and Pensions (DWP) review of automatic enrolment. We were pleased to receive recognition of our strong governance arrangements as part of the January 2014 triennial review of pension bodies and we will look to build on this in preparation for the next review in 2016. We will continue to inform the regular DWP-led evaluation reports in the run up to the full review of automatic enrolment in 2017, to which we also hope to make a helpful contribution. We are sure that future action taken by our government, the EU, pension providers, advisers, scheme members and many others will ensure that our task evolves further. However, through continuing to work closely with our sponsoring department the DWP, other departments and financial regulators, and drawing on the growing expertise of the team at the regulator, we believe that we are well placed to rise to new challenges.

Mark Boyle

Chair, The Pensions Regulator May 2014

Stephen Soper

Interim chief executive, The Pensions Regulator May 2014

Executive summary

The Pensions Regulator is the UK regulator of work-based pensions. We are a non-departmental public body established under the Pensions Act 20042 .

2

In this Corporate Plan, references to the law that applies in Great Britain should be taken to include corresponding legislation in Northern Ireland.

Regulatory approach

We have a range of functions directed by six statutory objectives (see page 12) including our new objective, in relation to DB funding only, to minimise any adverse impact on the sustainable growth of an employer3

3

This objective is due to come into force in July 2014.

. As a risk-based regulator, we formulate our strategy and allocate our resources based on an assessment of priority risks in the context of our statutory objectives. We focus on those areas where our actions are likely to have the greatest impact. We aim to achieve compliance by educating and enabling those who have responsibility for pensions and by taking enforcement action where it is appropriate.

The pensions landscape: issues and risks

Both the memberships and assets of private pensions are currently concentrated within DB schemes, where 74% of assets (approximately £1 trillion) are held and which account for 12.7 million memberships. There are also currently more than 5 million memberships of work-based DC pensions. By 2018, the DWP estimates that there will be between 6 and 9 million people newly saving into pension schemes as a result of automatic enrolment. We believe most of these members will be in DC schemes and expect the assets currently in these schemes (around £400 billion) to more than double over the next 15 years.

The government’s strategy for work-based saving aims to increase the amount people are saving in pensions and the amount they receive, enable industry innovation, increase transparency and confidence, and ensure the UK system is sustainable. In particular, the pensions reforms announced in the March 2014 Budget are designed to boost freedom and choice for savers on retirement.

Risk is a feature of pension provision. Although we cannot guarantee that all risks to member benefits are removed, we seek to ensure that members, trustees and others understand and manage the risks facing their schemes.

Executive summary

Our research and analysis indicates a number of areas of concern in respect of governance and administration standards, particularly in smaller DC and DB schemes. Addressing these risks in DC schemes is especially important given that the vast majority of the schemes used for automatic enrolment will be DC schemes, where poor governance can more directly affect member outcomes.

Key current risks relating to automatic enrolment include those around employers’ preparation for their staging date, especially in the case of small employers, and the potential for late payments to schemes. For DB schemes, the main risks relate to under-funding. Although the economy is beginning to recover, affordability remains an issue for many employer sponsors. A further key risk to pension schemes of all types is the growing level of funds inappropriately released through pension liberation or otherwise misused.

Strategic plan 2014-2017

For the period of this Corporate Plan, we have adopted four corporate priorities to guide our strategy (see page 27). They are derived from our statutory objectives and reflect the risks and challenges we expect to see over the next three years.

To promote good governance and

administration of work-based

pension schemes

We seek to improve scheme governance and administration by

ensuring that those who govern schemes are aware of, understand and engage with the obligations and the standards set out in law and in our regulatory material. Our research and analysis indicates that standards in some schemes remain inadequate and, within the three years covered by this plan, we will review our strategic approach to increasing the quality and skills of those who govern schemes.

In respect of DC schemes, we will continue to raise awareness of the core messages in our DC regulatory strategy, code of practice and guidance around good governance and administration, and promote compliance with the government’s new quality standards.

Regarding DB schemes, we will help trustees to gain an understanding of the overall risk facing their scheme by encouraging them to consider the areas of employer covenant, funding plans and investment strategy in the round rather than in isolation of each other.

Executive summary

From April 2015, we will have an extended role in respect of public service pension schemes, with responsibility for regulating their governance and administration but not their funding. We will publish our strategy and code of practice for public service pension schemes in autumn 2014.

We will also consult on a revised trustee knowledge and understanding code of practice and update the existing Trustee toolkit4

4

Our online learning resource, the Trustee toolkit, which

encapsulates the basics of trustee knowledge and understanding, is available free of charge to all trustees.

.

Where we believe member benefits are at risk due to poor governance, we will consider taking enforcement action.

To promote security and good outcomes

for members of work-based pensions

Our focus is to support the adequate funding and security of DB schemes, and help DC schemes to achieve good member outcomes. For DB schemes, we will employ a suite of risk indicators to inform our approach to assessing risk and use our annual funding statements to set out our views in relation to the risks facing schemes with effective valuation dates that year. To support employer sponsors to fulfil their obligations in respect of DB funding and also to achieve our new statutory objective to minimise any adverse impact on their sustainable growth, we will encourage trustees and employer sponsors to work together closely.

To support DC schemes to deliver good outcomes, we will promote the practical guidance set out in our code of practice on risk management, investment (especially in default funds), conflicts of interest, adviser appointment and administration. We will also work with the Institute of Chartered Accountants in England and Wales (ICAEW) to support implementation of the voluntary assurance framework for master trusts and consider whether to build on this through voluntary assurance initiatives for group personal pensions and administrators. The Financial Conduct Authority (FCA) regulates providers of work-based DC personal pensions and we will support it in this task.

The security of member benefits is increasingly threatened by pension liberation activity, potentially involving deception. Responsibility for tackling this issue rests with a number of government departments and agencies. Over the period of this plan, we will continue to raise awareness of the risks associated with pensions scams and pension liberation among those who govern schemes and work with government and industry partners to mitigate those risks. We will take a strategic approach to case work in order to tackle those liberation models and pensions scams that are new and pose a systemic risk to member benefits.

We will continue to monitor work-based DC and DB schemes through scheme return analysis, thematic reviews and individual scheme risk

Executive summary

To promote employer compliance with

their pension responsibilities

We will support employers to comply with their automatic enrolment duties and the employment safeguards by prompting them to prepare effectively and achieve particular milestones. We will also raise

awareness and understanding through media campaigns, speaking engagements, webinars and industry liaison events. Additionally, to help ensure that employers receive well-informed and comprehensive advice as well as appropriate products, we will work with the external adviser market to improve knowledge and understanding around the legal requirements on employers.

Given that DC schemes have, to date, been most employers’ choice of provision for automatic enrolment5

5

Within the private sector.

and our expectation that this trend will continue, we will help employers to select quality schemes that, where relevant, meet voluntary assurance standards. We will also work with employers and providers to support the timely flow of contributions to schemes.

We recognise the significant role that employer sponsors play in respect of DB schemes, and we will continue to provide tailored guidance to help them comply with their obligations. We will also engage with those schemes that present the greatest risk to member benefits.

In line with our operational approach, where education and enablement activities are not successful or appropriate, we will consider taking enforcement action.

To improve our organisational efficiency

and effectiveness

To ensure regulatory resources and activities are targeted where they can help us to meet our corporate priorities and statutory objectives, we are placing the pursuit of greater efficiency and effectiveness at the heart of our three-year plan. This includes the following elements: • adopting a programme of continuous efficiency gains

• reviewing our operating model to enable us to fully utilise our skills and resources

• reviewing our approach to the performance management of our staff including measures to ensure the workforce can be deployed flexibly

• enhancing our approach to corporate planning, resource management and performance evaluation

• upgrading our core IT systems, including case management and document management.

Executive summary

Additionally, we will continue to focus on the effective governance of strategic, operational and reputational risks, and develop our use of digital media.

Business plan 2014-2015

Details of our workload assumptions for 2014-2015, including our estimated caseload, are set out on pages 42-45.

We use key performance indicators (KPIs) as annual measures of regulatory interventions. We also monitor key outcomes on schemes, individuals and employers. Our KPIs are set out on pages 46-50. Pages 51-55 provide information on the resources required to meet our statutory objectives and corporate priorities during 2014-2015. The funding of regulation is derived from two main sources: a grant-in-aid from the DWP which is recoverable from a levy on pension schemes and a separate grant-in-aid from general taxation. This arrangement gives rise to two separate budget heads: ‘the levy budget’ and ‘the automatic enrolment budget’. We have controls in place to ensure there is no cross-subsidy between the two streams of funding.

The levy budget for 2014-2015 is £37.4 million and the automatic enrolment budget for 2014-2015 is £40.4 million. As we have identified a need for substantial investment in IT reflecting a long period of under investment and a significant increase in both the volume and complexity of our work, we are also in discussion with the DWP in relation to

additional funding. Subject to the approval of future business cases, in 2014-2015 an initial £7.4 million tranche has been set aside by the DWP to start the process of essential IT infrastructure replacement. This funding is over and above the costs set out in this Corporate Plan and will be drawn down from the DWP following approval of the individual business cases.

We are placing

the pursuit

of greater

efficiency and

effectiveness

at the heart

of our

three-year plan.

Introduction

The Pensions Regulator is the UK regulator of work-based pensions. We are a non-departmental public body established under the Pensions Act 2004. Our sponsoring body is the DWP and Parliament sets the legal framework within which we regulate.

We are responsible for regulating occupational DB schemes and occupational DC schemes, and for regulating limited aspects of work-based personal pensions. We are also tasked with maximising employer compliance with the employer duties and safeguards related to automatic enrolment into pensions. From April 2015, we will have an extended role in respect of public service schemes, with responsibility for regulating their governance and administration but not their funding.

The Corporate Plan

The Corporate Plan sets out our regulatory approach, the pensions landscape, our strategic plan for 2014-2017 and our business plan for 2014-2015.

Regulatory approach – This section outlines our statutory objectives; risk-based approach; operational approach of educate, enable, enforce; key audiences; making complaints; and performance evaluation.

The pensions landscape: issues and risks – This comprises an overview of the current landscape and a summary of the key issues and risks. Strategic plan 2014-2017 – This section sets out our corporate priorities and outlines our three-year strategic plans to achieve them.

Business plan 2014-2015 – The financial year 2014-2015 is covered here, comprising information on our workload assumptions, our KPIs and a summary of the resources we require to deliver our plans.

Introduction

Other public bodies concerned with pensions

In addition to central government departments, in particular the DWP, HM Treasury (HMT) and HM Revenue and Customs (HMRC), the regulator works alongside a number of other public bodies which have responsibilities regarding pensions. These include:

• Pension Protection Fund (PPF): The main function of the fund is to provide compensation for members of eligible DB schemes where the sponsoring employer becomes insolvent and the scheme is underfunded

• The Pensions Advisory Service (TPAS): TPAS provides information and guidance to members of the public on all pension matters, covering state, company, personal and stakeholder schemes

• Pensions Ombudsman: The Ombudsman has powers to decide on pensions complaints that affect individual members. It can also consider some issues from trustees or managers of pension schemes and participating employers

• European Insurance and Occupational Pensions Authority (EIOPA): The EIOPA is an EU authority set up to promote supervisory convergence and coherent application of regulatory standards across the EU, with a view to improving the functioning of the internal market for insurance and pensions

• Financial Conduct Authority (FCA): The FCA is the regulator responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the PRA. This includes supervising the establishment, operation and winding-up of personal pension schemes

• Prudential Regulation Authority (PRA): The PRA is the prudential regulator for deposit-takers, insurers and designated investment firms. Some PRA-authorised firms provide work-based pension schemes to their employees and ex-employees, and some also offer financial products and services in support of work-based pension schemes

• Government Actuary’s Department (GAD): GAD provides actuarial advice to the government and to a number of UK occupational pension schemes, including some of the largest pension schemes in the country. In particular, it advises many public service pension schemes, including the schemes for teachers, the National Health Service and the armed forces

• Money Advice Service: The Money Advice Service is an independent service set up by the government to help members of the public to manage their money, including retirement decisions.

Regulatory approach

The regulator operates under statutory objectives set out in the Pensions Act 20046

6

As amended by the Pensions Acts 2008 and 2014.

. These guide the exercise of our powers which are derived from a range of legislation dating from 1993 to 2014.

Our statutory objectives are:

1. To protect the benefits of members of occupational pension schemes 2. To protect the benefits of members of personal pension schemes

where direct payment arrangements are in place 3. To reduce the risk of situations arising which may lead to

compensation being payable from the PPF

4. To promote, and to improve understanding of, the good administration of work-based pension schemes

5. To maximise employer compliance with employer duties and the employment safeguards

6. In relation to DB scheme funding only, to minimise any adverse impact on the sustainable growth of an employer.

In undertaking our work we take account of the Regulators’ Code7

7

This replaced the Regulators’ Compliance Code and it came into force in April 2014.

and the principles of good regulation set out in the Legislative and Regulatory Reform Act 2006. That is to be: proportionate, accountable, consistent, transparent and targeted (PACTT). We track and evaluate our performance against these principles. We also operate within other relevant legislation, including the Human Rights Act 1998 and the Data Protection Act 1998.

Regulatory approach

Risk

As a risk-based regulator, we formulate our strategy and allocate our resources based on an assessment of priority risks in the context of our statutory objectives. We categorise the risks we identify in terms of the threat they pose, the extent to which we can mitigate them and the regulator’s willingness to accept risk. We focus on those areas where our actions are likely to have the greatest impact.

Our risk appetite statement (see Appendix 1 on pages 56-58) is set and reviewed annually by the Board. It outlines how we balance risk and opportunity in pursuit of achieving our corporate priorities and statutory objectives. This forms a key element of our governance and reporting framework, and its use and effectiveness is monitored regularly by our Audit and Risk Assurance Committee. It also provides further information on how we categorise different types of risk, including external, operational and reputational.

Through our information gathering, research capability and analysis of operational data and intelligence, we monitor the regulatory landscape to identify risks and emerging trends. Where appropriate, we proactively intervene to prevent these from crystallising or to minimise their effect. We work alongside other regulators and government agencies to share information on good practice and on risks of mutual interest8

8

Subject to legal constraints.

. We do this through both formal, regular engagement and where required by particular circumstances.

How risk links to our strategy, operations

and performance measurement

Identifying key risks in the pensions landscape (see pages 18-25) informs the basis for our regulatory strategy. To establish the main focus areas for our strategy, we analyse the key risks in the context of our statutory objectives and our expectations on how the risks will evolve over time. Subsequently, we determine which risks lie within our power to influence and what operational activities will enable us to effectively monitor or mitigate those risks. This, in turn, directs the allocation of our resources. Our KPIs (see pages 46-50) also reflect our key risks and provide

Regulatory approach

Educate, enable, enforce

Educate, enable, enforce is the operational approach we take to implement our regulatory strategy.

Educate and enable

Our programme of regulatory communications is focused on, first, educating our key audiences with regard to their obligations and our expectations. Secondly, we produce a range of materials and tools intended to enable trustees, employers and pension scheme managers, among others, to comply with their obligations.

We use communications to drive behavioural change and use different channels over the course of our communications programmes. We evaluate our impact at each stage to monitor the effectiveness of our interventions. Our messaging evolves through the following phases: • Awareness

• Understanding • Engagement

• Action (the regulatory outcome).

We use our media and stakeholder channels to raise awareness, and our web and direct channels to increase understanding and engagement. In keeping with the government’s ‘digital by default’ strategy, our primary point of contact is via our website at www.tpr.gov.uk. All of the materials we produce, including codes of practice, guidance, regulatory statements, reports under section 89 of the Pensions Act 20049

9

Under s89 of the Pensions Act 2004 the regulator may, if it considers it appropriate to do so in any

particular circumstances, publish a report of the consideration given by it to the exercise of its functions in relation to those circumstances and the results of that consideration. We produce s89 reports to educate and inform our stakeholders and with a view to increasing our regulatory transparency, among other matters.

, and a variety of web tools, are available online.

Regulatory approach

Enforce

Where appropriate, we have a number of enforcement options available to us. Our core powers include:

• requiring employers to automatically enrol eligible job holders into a pension scheme and comply with their other employer duties and the employment safeguards

• requiring employers to fulfil their role in maintaining the flow of contributions into pension schemes in a timely manner

• requiring employer sponsors to put compliant funding plans in place for their DB pension schemes, and where there has been avoidance requiring the employer sponsor and those companies associated with the employer sponsor to support the scheme • enforcing standards of trustee governance, including the

appointment and removal of trustees, and

• securing assets where we consider they have been misused or misappropriated.

Decisions to exercise our regulatory powers are taken by either those members of staff with delegated authority or, where powers are reserved10

10

The Pensions Act 2004 requires that certain decisions made by the regulator must be made by the Determinations Panel. The panel is a committee of the regulator but is separate from the case teams to ensure it can make its decisions independently and impartially,

considering all the evidence before it from each party.

, by the Determinations Panel, a committee of the regulator. Decisions can be referred to the Upper Tribunal.

Regulatory approach

Key audiences

Each of the groups set out below has very different responsibilities and needs, and we tailor our communication tools and guidance accordingly:

Trustees

There are around 100,000 pension scheme trustees and they are pivotal in protecting member benefits and delivering good member outcomes. Many are lay persons, which sometimes introduces issues of capability and capacity. Our main focus for trustees is to provide a range of information to assist them throughout the lifecycle of a scheme.

Employers

Employers have a critical role in the establishment of work-based pension provision and in maintaining contributions to their scheme. Under their automatic enrolment duties, which commenced in 2012 for the largest employers, approximately 1.35 million employers must select a pension scheme which meets the qualifying criteria11

11

See our interactive beginner’s guide to automatic enrolment at www.tpr.gov.uk/tools

and pay contributions to that scheme. Employers also have a key role to play in supporting the DB schemes they sponsor and in choosing a good DB or DC scheme for their workers. We provide guidance and tools to help employers comply with their obligations.

Public service scheme managers and

pension boards

The law requires that a scheme manager must be identified for each new public service scheme to be responsible for managing or administering the scheme and provide for the establishment of a pension board to assist the scheme manager. Our educational focus is to build a new toolkit to help them meet their responsibilities.

Intermediaries and payroll providers

Intermediaries and payroll providers are third parties who offer advice, information and services to employers and trustees in relation to pension provision or, in the case of employers, their automatic enrolment obligations. They have a high level of influence over employer and trustee behaviour and play a key role in supporting them with their existing and new duties. We work with representative stakeholder bodies to provide them with tools to assist their members in understanding the evolving regulatory environment.

Regulatory approach

Pensions and administration providers

Pensions and administration providers should deliver products that enable members to receive a good outcome from their savings. We will continue to work with them closely to promote the provision of quality schemes and to improve standards of administration, including record-keeping.

Individuals

We have direct contact with individuals on a number of issues. These include whistleblowing, pension liberation, member charges, retirement decisions and maintaining contributions. On other matters, we work closely with a range of public bodies, including the DWP, TPAS and the Money Advice Service (see page 11), to provide guidance and information to individuals and to raise awareness of important pensions issues. As automatic enrolment moves forward, we will continue to review our materials aimed at small and micro employers, including how we can support them in communicating with their individual employees.

Making complaints

If those we regulate or related individuals are dissatisfied with the way in which we have made decisions or the service they have received from the regulator, we operate a two-stage formal complaints process12

12

View full details at www.tpr.gov.uk/ complaint

. We can deal with any complaint about the way in which we have carried out, or failed to carry out, our role. This includes complaints about mistakes or lack of care, unreasonable delay, unprofessional behaviour, bias or lack of integrity by the regulator and its staff.

The Parliamentary Ombudsman can also investigate complaints against the regulator. Normally the Ombudsman will only accept a case if our internal complaints procedure has been exhausted.

Performance evaluation

We seek to continually improve our performance. The Board and senior management team review the regulator’s performance on a regular basis and take action to ensure we achieve our targets. Where necessary, the senior management team makes recommendations to the Board regarding emerging risks to achieving our Corporate Plan and how to resolve them. We also set KPIs which are reviewed and updated annually. Our 2014-2015 KPIs are set out in this plan on pages 46-50.

The pensions landscape:

issues and risks

Landscape

Our powers apply to both private pensions and public service pensions. We are concerned with four main types of private work-based pension products: DB (trust-based), hybrid (trust-based), DC occupational (trust-based) and DC work-based personal pension (contract-based). The work-based pensions landscape, summarised in the table below, also includes public service schemes where the local government pension schemes (LGPS) are funded but the others operate on a ‘pay as you go’ basis13

13

The table above reflects the schemes that will be public service schemes under the Public Service Pensions Acts. There are other funded and unfunded public body schemes which may or may not become public service schemes in due course but these will not materially affect the figures in the table above in terms of either memberships or assets.

.

Private schemes Public service schemes

Current landscape DB Hybrid DC trust DC contract Unfunded LGPS Schemes 5,530 1,380 37,690 2,020 106 101 Memberships 7.8m 4.9m DB 1m DC 1.7m 2.7m*** 8m 5m Assets £1,118.5bn* £270bn** £115bn** N/A £211bn****

Sources: The pension register, The Pensions Regulator January 2014 except: *The Purple Book, The Pensions Regulator and PPF March 2013; **Pensions in the national accounts, Office for National Statistics (ONS) April 2010 (includes £110 billion of decumulated assets); ***Annual survey of hours and earnings, ONS 2012; ****2012-2013 LGPS annual reports

Both the memberships and assets of private pensions are currently concentrated within DB

schemes, where 74% of assets are held and which account for 12.7 million memberships. Although the majority of DB schemes are now closed to new members there are more than 4,000 private pension schemes where new DB pension rights are being accrued. DB schemes hold overall assets of over £1.1 trillion and the value of the pension benefits on a buy-out basis currently amounts to more than £1.8 trillion. The proportion of private DB schemes open to new members remained broadly constant between 2012 and 2013 at 14%.

The pensions landscape: issues and risks

Figure 1: 2013 distribution of DB schemes by status

2% Closed to new members but open to

future accruals of existing members: 3,326 (54%)

Closed to future accruals: 1,868 (30%) Open: 841 (14%)

Winding up: 115 (2%)

14%

30% 54%

Even closed DB schemes are expected to have obligations that project over the next 60 years and beyond, as illustrated by the chart below14

14

Our estimates as shown are for illustration only, based on data reported by UK pension schemes and a number of assumptions. In particular, the estimates assume that all schemes are closed to future accruals and all members commute 20% pension at retirement.

. See page 22 for details of the risks arising from the maturing of DB schemes.

Figure 2: Estimated cash outflow from DB schemes

60 £bn (constant prices) 45 30 15 0 2014 2019 2024 2029 2034 2039 2044 2049 2054 2059 2064 2069 2074 2079 Deferred Current status: Active Pensioners

The pensions landscape: issues and risks

By 2018, the DWP estimates there will be 6-9 million members of pension schemes who have joined due to automatic enrolment. DC schemes have, to date, been most employers’ choice of provision for automatic enrolment and we expect this trend to continue, with a particular increase in the membership of multi-employer master trusts and group personal pensions. Although it will be a number of years before DC schemes hold as many assets as DB schemes, the chart below illustrates the significant increase in DC assets from the current figure of around £400 billion that we expect to see through to 203015

15

Our projection as shown is for illustration only, based on internal modelling and assumptions. It is determined by, among other things, rate of retirement, investment return, and contributions from existing and future DC scheme members.

.

Figure 3: DC assets forecast

DC scheme assets (assuming retirement at 65) 1,200 1,000 2018 £bn (constant prices) 800 600 400 200 0 2014 2022 2026 2030

The pensions landscape: issues and risks

Public service schemes are currently going through a period of significant change in preparation for the Public Service Pensions Act 2013 coming into force by April 2015. Currently, there are more than 200 registered schemes of this type accounting for around 13 million memberships. Once the proposed reforms have been completed, these schemes will have redesigned their benefits and introduced new governance arrangements.

Policy context

To help people save for their retirement, the government wants work-based pensions to be affordable for employers and attractive to workers. The government’s strategy for work-based pensions aims to:

• increase the amount people are saving in pensions and the amount they receive for their savings

• enable industry innovation and development of new products • increase transparency and build trust, confidence and

engagement in pension saving, and

• make sure the UK pension system is sustainable and stable. In order to achieve these aims, the government has introduced

automatic enrolment and is also working on a number of new initiatives. These include introducing legislative minimum quality standards for work-based DC schemes and a system of automatic transfers whereby the pension pot follows the member as they move jobs, and exploring the potential for new types of pension provision such as defined ambition schemes.

Additionally, as part of his March 2014 Budget speech, the Chancellor announced a number of new proposals intended to increase freedom and choice in pensions. From April 2015, people retiring with DC provision will be able to choose whether they want to purchase an annuity or a drawdown product, or alternatively extract all of their pension savings in a lump sum subject only to the marginal rate of income tax. The reforms also include a commitment to deliver the right guidance and support to help people make a retirement decision that best suits their personal circumstances.

We expect the

assets held in

DC schemes

to more than

double over

the next 15

years.

The pensions landscape: issues and risks

Issues and risks

Risk is a feature of pension provision. We are not able and do not seek to remove all risk; taking some risk may lead to greater rewards and lower costs for members and employer sponsors. There are also a number of wider economic, political and demographic risks affecting the pensions sector over which we may have little or no control. We, therefore, prioritise our interventions in terms of risk, cost and perceived benefits in a consistent way, choosing the most appropriate course of action from our suite of enabling, educational and enforcement tools. In doing so, we seek to ensure that members, trustees and others understand and manage the risks facing their schemes16

16

See pages 13 and 56-58 for further information on our approach to risk.

.

DB schemes

The primary risks facing DB schemes arise from their current state of under-funding. The ability of the employer to make good this deficit, together with key financial factors such as interest rates and inflation, largely determines the extent to which the promises made by DB schemes will be met. Despite an increase in economic growth in 2013, which is forecast to continue through 2014-2015, we believe affordability for scheme sponsors will remain an issue for many employers.

The anticipated economic recovery over the coming year should help other employers to strengthen their position as they find new opportunities for growth and investment. However, there are risks which arise as the economy recovers, including the possibility of increased insolvencies, given that bank forbearance may end in a growing economy. Also, economic growth can result in increased merger and acquisition activity, which brings with it greater scope for avoidance and the need for clearance of complex financial transactions. The reduction or severing of employer support, leading to scheme failure, may result in substantial claims on the PPF and an increased risk of uncompensated losses to members. The PPF expects total claims from March 2008 to March 2013 to amount to £3.5 billion17

17

For further information, view the Purple Book 2013 at www.tpr.gov.uk/ purple2013

.

Looking to the longer term, the fact that the majority of DB schemes are now closed to new members, with the proportion of active membership down to 18% of total membership, means that DB schemes in the UK are maturing rapidly (see chart on page 19). This presents significant risks for schemes managing a liability where benefits paid out exceed income from planned contributions and investments. Schemes that have planned sufficiently well in advance for this phase of their lifecycle should not be affected unduly. For others, the reduced remaining timeframe within which to balance their finances may place strain on their investment strategy and expose (through the need for additional contributions) the employer sponsor’s business to operational

constraints and ultimately greater risks to its sustainability. This is at a time when a small and decreasing percentage of the workforce will be benefiting from the scheme, thereby increasing the risk of employer

Q1 2014/15Q2 2014/15Q3 2014/15Q4 2014/15Q1 2015/16Q2 2015/16Q3 2015/16Q4 2015/16Q1 2016/17Q2 2016/17Q3 2016/17Q4 2016/17Q1 2017/18Q2 2017/18Q3 2017/18Q4 2017/18 The pensions landscape: issues and risks

Automatic enrolment

Automatic enrolment is the core employer duty of the pension reforms introduced by the Pensions Act 2008. The reforms require employers to automatically enrol their eligible job holders into a qualifying pension scheme, make a minimum contribution into the scheme and complete registration with the regulator18

18

. By 31 March 2014 around 15,000 employers had reached their staging date. By the end of the current financial year a further 32,000 employers will have staged. During the final two years covered by this plan we estimate an additional 770,000 employers will be subject to the duties. For many, this will be a new and untested process which may give rise to risks associated with both the quality of the schemes to be used and the implementation of automatic enrolment itself (see box on page 25).

Figure 4: Automatic enrolment – employer staging volumes by quarter

Medium-sized employers, 50-249 people

Small and micro employers, Fewer than 50 people

New employers Number of employer P A YE schemes (000s) 50 100 150 200 250 0 Q1: 1 April – 30 June Q2: 1 July – 30 September Q3: 1 October – 31 December Q4: 1 January – 31 March

The pensions landscape: issues and risks

DC schemes

While, by design, DC pension schemes entail members carrying a wide range of risks, in particular those driven by economic and demographic factors, there are many risks that can be reduced by good governance or regulatory intervention. Key among these risks are poor trustee oversight and poor value for money, both of which are sometimes associated with small-scale provision although much less so with larger schemes.

The risk of poor governance by trustees is especially important in DC schemes given that weak investment strategies and bad record-keeping, for example, can more directly affect member outcomes. Our 2014 scheme governance survey19

19

View the survey at www.tpr.gov.uk/ governance2014

suggests that the current state of trustee training structures is uneven. It found that only 25% of schemes have a training plan in place for trustees and only 62% of schemes report usage of the Trustee toolkit. The frequency with which schemes review their skills is also a cause for concern. The DC features survey 201320

20

View the survey at www.tpr.gov.uk/ dcfeatures2013

notes that around one quarter (24%) of all DC schemes review their skills less than every three years. There are significant variations in response by scheme size, with smaller schemes being less likely to respond positively. The effective running of schemes requires that adequate internal controls are in place. A lack of internal controls is a primary risk driver associated with a range of negative member outcomes, including misappropriation of assets and poor record-keeping. Evidence from our scheme

governance survey 2014 suggests that at least 36% of DC schemes do not have documented internal controls and, even in DC schemes where controls are documented, 38% do not report having a risk register, while the DC features survey 2013 reports that 45% of schemes do not have a documented plan of accountabilities and responsibilities for all elements of scheme management. Additionally, anecdotal evidence points towards a number of potential administration risks including disclosure errors, poor communication and processing errors.

Pension liberation

A further important risk in pension provision is the risk of pensions scams and of pension liberation, which may attract tax charges and in some cases may be fraudulent. The level of funds inappropriately released through pension liberation is increasing at a significant rate – we estimate at least £420 million21

21

This figure represents the amount of such activity that has been reported to us to date. We recognise the actual figure may be significantly higher.

from occupational pension schemes since 2011.

The pensions landscape: issues and risks

Automatic enrolment: key challenges

Employers

Large employers (250+): Most employers in this group have now successfully automatically enrolled their eligible job holders and completed registration, or are about to undertake registration, with the regulator. Their next challenge will be the triennial process of re-enrolling employees and re-registration with the regulator, which is due to commence in summer 2015.

Medium-sized employers (50-249): Our focus from early 2014 lies with this group. More than 30,000 medium-sized employers will stage between April 2014 and April 2015 and our research suggests that medium-sized employers are less likely than large employers to have in-house expertise. This will increase reliance on the readiness of pension providers, independent financial advisers (IFAs), employee benefit consultants (EBCs), software providers and payroll bureaux to provide accurate, timely and affordable products and services to the relevant employers. There is a risk that some employers will leave it until the last minute to set up pension schemes or update their payroll systems.

Small (5-49) and micro (1-4) employers: Looking ahead to mid 2015, small and micro employers will start to reach their staging dates. There are approximately 1.3 million employers in this group and many may have limited access to, or motivation to seek, advice. Therefore it is critical for them that they automate as much of the enrolment processes as possible. The timely availability of the relevant supporting tools and material through pension providers, payroll software and/or middleware developers will be vital.

Advisers, pensions providers and payroll software developers

Medium and small employers are likely to seek advice from IFAs, accountants, payroll administrators or bookkeepers, among others. It is important that advisers know their client’s staging date and have a good understanding of the legislation.

Pension providers have the challenge of ensuring their products are suitable for automatic enrolment and have the capacity to supply employers in time for their staging dates.

It is essential that automatic enrolment products and services, such as payroll software or payroll bureaux, are available to enable employers to comply with the legislation and are available in time for employers to make use of them. Employers will expect software programmes to automate as many of the legislative requirements as possible to support them in being compliant.

Employers should choose their scheme and payroll software no fewer than six months before their staging date to provide as much lead time as possible for providers to deal with the volume of demand each month.

Strategic plan

2014-2017

Corporate priorities

For the period of this Corporate Plan, we have adopted four corporate priorities to guide our strategy. They are derived from our statutory objectives and reflect the risks and challenges we expect to see over the next three years.

To promote good governance and administration of work-based pension schemes: Influencing good governance and administration is central to our role and is an essential function in protecting member benefits. The responsibility for the sound operation of pension schemes resides with those who manage and govern them: trustees and providers in the case of private pension schemes, and scheme managers in the case of public service schemes, with assistance from pension boards. To promote security and good outcomes for members of

work-based pension schemes: Two key tasks for the regulator are promoting

adequate funding levels in DB schemes22

22

Private DB schemes only. balanced with achieving

our new statutory objective to minimise any adverse impact on the sustainable growth of an employer, and supporting DC schemes to deliver good member outcomes. Trustees and employers should work together in an open and transparent manner to formulate appropriate funding plans for DB schemes that aim to pay the promised level of benefits, while recognising the needs of the employer sponsor and its long-term ability to support the scheme. It is equally important that those with responsibility for the growing quantity of assets held in DC schemes deliver value for money and good outcomes for members. To promote employer compliance with their pension responsibilities: For automatic enrolment to be effective, we believe there should be a pro-compliance culture among employers so that they are aware of and understand their obligations, want to comply with their legal duties and advocate that non-compliance by other employers is not acceptable. Where eligible job holders are automatically enrolled into a DC scheme, employers must ensure they maintain a timely flow of contributions to that scheme. In respect of DB schemes, employers must comply with their scheme funding obligations.

To improve our organisational efficiency and effectiveness: As a public body it is essential that we operate as efficiently and

effectively as possible, with due regard to the standards set out in HMT’s Managing Public Money guidance. Our Board has ultimate responsibility for ensuring the regulator is run properly as a public body with effective internal controls and for ensuring compliance with statutory and

administrative requirements for the use of public funds. In addition, our risk-based approach enables us to concentrate our finite resources on the areas where we can have the greatest impact.

Strategic plan 2014-2017

The following table illustrates the link between our corporate priorities and statutory objectives.

Corporate priorities Related statutory objectives

To promote good governance and administration of work-based pension schemes

• To protect the benefits of members of occupational

pension schemes

• To promote, and to improve understanding of, the good

administration of work-based pension schemes. To promote security and good

outcomes for members of work-based pension schemes

• To protect the benefits of members of occupational

pension schemes

• To protect the benefits of members of personal pension

schemes where direct payment arrangements are in place

• To reduce the risk of situations arising which may lead to compensation being payable from the PPF

• In relation to DB scheme funding only, to minimise

any adverse impact on the sustainable growth of an employer.

To promote employer

compliance with their pension responsibilities

• To maximise employer compliance with employer duties

and the employment safeguards

• To protect the benefits of members of occupational

pension schemes

• To protect the benefits of members of personal pension

schemes where direct payment arrangements are in place. To improve our organisational

efficiency and effectiveness

• As a public body it is essential that we operate efficiently and effectively. This relates to all of our statutory

Strategic plan 2014-2017

To promote good governance and

administration of work-based

pension schemes

Schemes are governed and administered by trustees, scheme managers, pension boards, administrators and providers.

We seek to improve scheme governance and administration by

ensuring that those who govern schemes are aware of, understand and engage with the obligations and standards set out in law, in our trustee knowledge and understanding code of practice and in other regulatory material.

Our 2014 scheme governance survey continued to reflect uneven standards of governance and administration, with less successful results in smaller DC and DB schemes. For example, those schemes were less likely to rate their board of trustees’ governance as effective and less likely to have strong internal controls in place23

23

View the survey results at www.tpr.gov.uk/ research

.

The increasing number of scheme memberships under automatic enrolment highlights the need for trustees to expertly select, manage and monitor their scheme’s investments and, in the case of DC schemes, to communicate with members regarding scheme performance, likely retirement outcomes and the extent of compensation arrangements. Therefore, during the period of this plan, we will review our strategic approach to the achievement of high standards of governance and administration in occupational pension schemes. We will seek to raise significantly the level of knowledge and understanding that those with responsibility for governing pension schemes can demonstrate. With specific reference to DC schemes, we will focus on continuing to raise awareness and understanding of our six DC principles among those who govern DC schemes. These principles are underpinned by 31 quality features which encapsulate those activities, behaviours and control processes that are more likely to deliver good member outcomes. We expect trustees to produce a governance statement explaining the extent to which their scheme has incorporated our features24 24 Download a governance statement template from www.tpr.gov.uk/ governancestatement .

Strategic plan 2014-2017

In respect of DB pensions, well-governed schemes are a cornerstone of our strategy to protect DB member benefits, along with strong employers and appropriate funding plans. Central to good governance is trustee knowledge and understanding of risks to their scheme, especially in the key areas of employer covenant, funding plans and investment strategy. In order to gain a good understanding of the overall risk faced by their scheme, we will encourage trustees to take an integrated approach to risk management, which will involve considering these areas in the round rather than in isolation of each other.

For all scheme types, we aim to support trustees through our education and enablement activities such as producing quick guides, carrying out promotional activities and organising webinars and workshops. Where possible, we will evaluate the extent to which there has been behavioural change as a result of this work.

We will also consult on a revised trustee knowledge and understanding code of practice and update the Trustee toolkit to ensure they are aligned to our new and revised strategies, codes, guidance and

policies for DB and DC schemes. We are moving to an ongoing record of development for trustees who use the toolkit rather than issuing completion certificates. This should enable us to track individual trustee knowledge and understanding as it evolves.

Where we believe that member benefits in trust-based DB schemes, trust-based DC schemes or in public service schemes are at risk as a result of poor governance, we will consider taking enforcement action. Our options include issuing improvement notices to trustees or public service scheme managers who are not complying with their duties as well as our powers of trustee appointment and prohibition.

Central

to good

governance

is trustee

knowledge

and

understanding

of risks to

their scheme.

Strategic plan 2014-2017

Code of practice for public service

pension schemes

From April 2015, public service pension schemes will be managed or administered by scheme managers.

Our code of practice for public service pension schemes will be published in autumn 2014 and will cover:

• conflicts of interest

• knowledge and understanding for members of pension boards

• publication of information about pension boards, governance and administration

• internal controls • record-keeping

• late payment of employer and employee contributions • information about member benefits and disclosure of

information to members • internal dispute resolution, and • reporting breaches of the law.

Prior to our responsibilities coming into force in 2015, we will build new web content to promote the effective governance and administration of public service pension schemes. This will include dedicated tools as well as any guidance on our code of practice and other matters.

We will build

new web

content to

promote the

effective

governance

and

administration

of public

service

pension

schemes.

Strategic plan 2014-2017

To promote security and good outcomes

for members of work-based pensions

Our focus is to support the adequate funding and security of DB schemes, and help DC schemes to achieve good member outcomes. Where DB schemes are subject to the Pensions Act 2004, they are required to meet the statutory funding objective. Where a scheme is not funded to this level, a recovery plan must be put in place25

25

Section 226 (1) Pensions Act 2004.

. We will assess the risk schemes pose to our objectives against our suite of risk indicators to decide on those we wish to further engage with. At this stage, we may seek to gain a better understanding of issues including employer affordability and sustainable growth plans. We will also

continue to engage proactively with a small number of schemes prior to their recovery plan submission date. This will allow us to understand how schemes and employers are incorporating our messages and guidance into their funding plans, and to help them reach acceptable outcomes. To support employers to fulfil their obligations in respect of DB funding in a way that helps to achieve our new statutory objective, we will

encourage trustees and employer sponsors to work together closely. This will include ensuring that trustees reach appropriate funding outcomes that reflect a reasonable balance between the need to pay promised benefits and minimising any adverse impact on an employer’s sustainable growth. We will also seek to ensure that trustees focus on the importance of understanding the employer covenant and give full consideration to the employer sponsor’s affordability, growth and investment plans within the context of the needs of the scheme. We will encourage trustees and employers to work collaboratively to use the flexibilities in the system appropriately to best suit the needs of both the scheme and sponsor. Where compliance with scheme funding requirements proves critical to the sustainability of a sponsoring employer, we may work with all relevant parties to determine a workable solution that takes account of each party’s objectives and duties.

In light of our new objective, we will finalise our revised code of practice and regulatory strategy and policy for DB schemes in the summer of this year. The code sets out the standards and practices we expect from DB scheme trustees. The strategy and policy explain how we intend to approach the regulation of DB schemes.

Strategic plan 2014-2017

In particular, we will set out our focus on the key risk areas which influence the overall ability of DB schemes to pay benefits in full – employer covenant, funding and investment. This includes our approach to using a suite of risk indicators to inform our risk assessment process, taking into account the strength of the sponsoring employer’s covenant and the scheme’s needs. This will help us to be transparent about our expectations for DB schemes, consistent with our overall policies and messages, and to focus our resources on those schemes where our intervention is most appropriate. We will use our annual funding statements over the period of this plan to set out our views in respect of the risks faced by schemes with effective valuation dates that year. For DC schemes, our new DC regulatory strategy, code of practice, accompanying regulatory guidance, and compliance and enforcement policy are designed to improve the quality of schemes and to support the market to deliver good member outcomes. For example, with reference to our quality features, the DC code sets out practical guidance for trustees on the areas of risk management, investment, conflicts of interest, adviser appointment and administration.

Our regulatory guidance references a broader range of issues, including retirement choices and communicating to members about investment strategies and costs and charges. We ask trustees to consider scheme costs and benefits, and to carry out value for money assessments. We also encourage trustees to assist members by designing a robust retirement process that supports retirees in the decisions they need to make. In light of the 2014 Budget, and the commitment to provide a guidance guarantee to members at or approaching retirement, we will work with the government and the FCA to ensure that the framework for this guarantee meets the needs of occupational trust-based schemes and their members.

DC schemes will also need to comply with the government’s new legislative minimum quality standards which are due to come into force in 2015 and, where relevant, we will update our DC materials to ensure alignment.

In view of the increase in the use of DC master trusts as a result of automatic enrolment, we have worked with the ICAEW to develop a voluntary assurance framework for master trusts. In addition, we are considering voluntary assurance initiatives for administrators and group personal pensions. As illustrated in the diagram below, this approach builds upon a combination of legislation, industry initiatives and

enforcement activity in order to deliver higher standards of governance and administration for work-based DC pension schemes.

We will

encourage

trustees and

employers

to work

collaboratively

to use the

flexibilities in

the system

appropriately

to best suit

the needs

of both DB

schemes and

employer

sponsors.

The Pensions Regulator and FCA enforcement

Voluntary governance statement

Minimum quality standards

Legislative requirements Voluntary independent assurance

for master trusts/group personal pensions/administrators

Strategic plan 2014-2017

Figure 5: The regulation of DC schemes

The FCA regulates the providers of DC work-based personal pension schemes and we will work closely with the FCA to support it in this task. The dual regulatory structure, whilst based on different statutory objectives, has a common aim to protect consumers (the FCA) and members (the regulator). Furthermore, with the introduction of the DWP’s quality standards, both DC work-based personal pensions and DC occupational pensions will be subject to minimum standards for the first time, which will inform the regulatory approaches of both the FCA and the regulator. Additionally, the regulator will support a value for money audit of both trust- and contract-based workplace pension schemes through our membership of an Independent Project Board (IPB) established under the auspices of the Association of British Insurers. The IPB will report by the end of 2014.

Over the period of this plan, we will continue to monitor DB and DC work-based schemes through scheme return analysis, thematic reviews and individual scheme risk assessment. We will also respond to breaches of the law reported to us by whistleblowers.

As a result of our monitoring and risk analysis activities, there will sometimes be a need for further investigation in particular cases. Where a breach has occurred, or where there is a risk to member benefits or to the PPF, we have a range of enforcement options available. These include improvement notices, civil penalties and our powers of trustee appointment and prohibition.

When we consider enforcement action in respect of a DB scheme, we will not only consider using our funding powers but also whether the use of other powers is appropriate. This may include issuing a financial support direction under section 43 of the Pensions Act 2004 in order to ensure that employer support for the scheme is adequate.

Where appropriate, we will continue to publish reports under section 89 of the Pensions Act 2004 on our considerations in particular circumstances. This may be in relation to any area of work within the responsibility of the regulator. In particular, we will use this power to explain how we’ve used our functions to deter the operation of pension liberation schemes (see page 36).

Further information on our approach to monitoring and enforcement is set out in our regulatory strategies and policies.

The DWP’s

quality

standards will

see both DC

work-based

personal

pensions

and DC

occupational

pensions

become

subject to

minimum

standards for

the first time.

Strategic plan 2014-2017

Financial crime and pension fraud

The security of member benefits is increasingly threatened by financial crime, including pension fraud. Fraud relating to pensions can take a number of forms but, over the period of this plan, we will focus our efforts on addressing pension liberation fraud and other pensions scams.

Pension liberation is the mechanism by which an individual transfers their pension funds to another arrangement in order to access it, typically before age 55. To do so is not necessarily illegal, but is likely to give rise to a tax liability. However, there are certain kinds of pension liberation that may involve some form of deception or wrongdoing, up to and including criminal activity, and we categorise those cases as pension liberation fraud.

The level of funds inappropriately released through pension liberation is increasing at a significant rate – based upon the cases reported to us, we estimate at least £420 million from occupational pension schemes since 201126

26

This figure does not include work-based personal pensions.

. It is vital that individuals are made aware that their participation in pension liberation activity could result in the loss of all of their pension savings in addition to a very high tax charge.

Action to disrupt pension liberation fraud and other pensions scams is led by the Project Bloom task force, which brings together government departments, regulators and criminal justice agencies. We will continue to play an active role in Project Bloom to help raise public awareness of the issues and to undertake strategic case work where appropriate. In particular, we intend to:

• focus our attention on those cases where members are being deceived into transferring their benefits into an inappropriate arrangement, in particular, for example, where we consider the model being used to release the funds in that way is new and poses a systemic risk to the security of pension benefits. Where appropriate, we will publish details of our regulatory activity and any determinations in section 89 reports to act as a deterrent

• continue to work with government and industry partners, including the DWP, HMRC, the FCA and the Pensions Administration Standards Association to raise awareness among trustees, administrators, providers and members of the risks associated with pension liberation fraud and other pensions scams

• work with government and industry partners to take a co-ordinated approach to mitigating risks associated with and disrupting pensions scams and pension liberation fraud, including consideration of the potential for legislative or regulatory change

• work as part of an industry group with the objective of producing a voluntary code that sets the standard for dealing with requests by members for transfers between pension schemes and the due diligence that is needed.