Schemes have been urged to look closely at their investment strategies in light of The Pensions Regulator’s new obligation to consider the impact of contributions on plan sponsors.

The Pensions Bill introduces a new objective for the regulator to support funding arrangements compatible with sponsors’ sustainable growth.

Funds to pay pensions come from investment returns and sponsor contributions, investment advisers RisCura said, and until now TPR has been able to require companies to direct spare funds into their pension schemes.

“Companies are now in a position whereby if they have spare cash they can utilise it in the company for growth and are under less obligation to pump further monies into the pension scheme,” RisCura UK managing director Andrew Slater said. “This is a game-changer for the industry: the focus for schemes must now switch to generating investment returns.”

Slater said trustees should challenge their investment advisers on the best strategies to achieve the returns required to compensate for any fall in contributions.

Introduction of the new objective is part of the government’s wider stated agenda of shifting the balance of regulation in favour of private investment and growth.

The objective sits alongside the regulator’s other goals of protecting members’ benefits, reducing the risk of calls on the Pension Protection Fund, and promoting and improving understanding of the good administration of work-based pension schemes.

The regulator is also tasked with maximising employer compliance with automatic enrolment duties.

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