The government has been urged to establish a single regulator responsible for regulating all workplace pensions in order to ensure adequate and consistent protection for members, a report by the Work and Pensions Committee has shown.

The report Improving governance and best practice in workplace pensions stated that having three regulators, The Pensions Regulator, the Financial Conduct Authority and the Prudential Regulation Authority could lead to further gaps arising in pensions’ regulation. The growth of auto-enrolment within the pensions market has meant that current regulatory arrangements are fragmented and there are significant overlaps in both duties and responsibilities of each regulator.

The Work and Pensions Committee has also called for deferred-member charges and member-borne consultancy charges to be banned, arguing that it has the potential to cause serious consumer detriment.

Barnett Waddingham consultant Malcolm McLean commented: “The committee’s view that there would be considerable advantages in having one regulator responsible for regulating all workplace pensions makes total sense to me.

“We are constantly hearing from either The Pensions Regulator (TPR) or the FCA about the need to liaise and/or consult one with the other on a range of activities, slowing down the process and making for a very bureaucratic looking and sounding operation. The system is not only inefficient but positively dangerous, as the committee has rightly observed, in that gaps could exist in the respective jurisdictions which could allow important actions to fall between two stools and be omitted altogether. There appear to be no over-riding operational reasons of having more than one regulator in the pensions field – indeed it is surprising that the government hasn’t jumped at the opportunity previously to capitalise on the very real administrative cost savings such a merger would undoubtedly produce.”

CBI director for employment and skills Neil Carberry argued however that “there is no need for a single regulator”. He said: “The Pension Regulator’s own analysis shows that standards of governance are equally rigorous across both trust and contract-based schemes.”

The report also dealt with the issue of ‘pot-follows-member’ and the Work and Pensions Committee stated that it remains concerned about the potential for this system to “result in consumer detriment for some individuals which might arise if pots are transferred into schemes which are less beneficial to members”.

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