The Pensions Regulator's action to protect retirement savers and promote high standards across the pensions sector is set out in its latest annual report and accounts 2010-11.
The regulator's chair Michael O'Higgins said:
"The impact of global economic turbulence on pensions is still being felt, and a number of key scheme funding and avoidance cases have come to a head over the past year.
"The regulator has demonstrated that we will use our powers to protect members and the Pension Protection Fund if necessary. We have also impressed upon trustees the importance of understanding the sponsor's situation and working with them to improve the security of defined benefit schemes."
Chief executive Bill Galvin added:
"We have experienced a very busy 12 months, and despite the difficult environment, I am pleased that we have achieved many of our goals. 2011-12 is already shaping up to be another crucial year, as our campaign to educate employers about their automatic enrolment duties gathers pace. We are excited by that challenge.
"In parallel with our work with employers, we will be placing a greater focus on supporting the DC market to deliver products that put members' best interests first. The quality of DC products is critical to the success of the Government's pensions reform, and segments of the market have some way to go in this regard.'
The report details the regulator's work during 2010/11
Reducing risks to members of defined benefit (DB) pension schemes:
-
We demonstrated our determination to secure DB pensions through the use of our anti-avoidance powers in high-profile cases include Nortel and Lehman. The High Court found that an FSD is valid in an insolvency event, reinforcing our ability to ensure the pension creditor is equitably treated;
-
We worked to raise awareness of the risks associated with Enhanced Transfer Values (ETVs) and similar exercises. We published a joint statement with the FSA as well as updated regulatory guidance on incentive exercises;
-
We ran an education drive and published guidance focusing on the importance of the employer covenant (the employer's legal obligations to a scheme, and their ability to meet them) in providing security for DB pensions, including related issues such as the use of contingent assets; and
-
Our regulatory case teams assessed approximately 2,500 DB cases including scrutinising recovery plans.
Reducing risks to members of defined contribution (DC) pension schemes:
-
We initiated a dialogue with the pensions sector on what good DC pensions look like and how our regulatory approach can support good outcomes for members. We received 60 replies to our discussion paper and will publish our initial response shortly;
-
We suspended trustees of more than 250 small DC schemes - to protect members' benefits; and
-
We launched a number of updated products to mitigate the risks to members of DC pensions - including the ‘Making Your Retirement Choices' leaflet for members, which emphasises the importance of shopping around before converting your DC pension into a retirement income.
Improving governance and administration:
-
We set robust standards for record-keeping to ensure that members receive correct retirement benefits; and
-
We also ran an education drive to raise standards of administration - in particular improving understanding among trustees and administrators of their respective roles and accountabilities.
Preparing for 2012:
-
We continued our work building a robust employer compliance framework in order to maximise compliance with automatic enrolment duties; and
-
We prepared a suite of information and guidance tailored to the needs of employers of different sizes, advisers and intermediaries. Much of this content has since gone live on our website in the current 2011-12 financial year.
|
