The Pensions Regulator (TPR) has identified around 50 pension schemes to “probe” over “excessive” dividend payments relative to pension contributions.

Speaking at the Pensions Age Autumn Conference, TPR lead investment consultant, Fred Berry, explained that the schemes they have concerns about will be contacted in the build-up to their triennial valuation.

This year’s annual funding statement has stronger expectations with regards to contributions, especially concerning sponsoring employers that pay dividends that are excessive relative to the contributions paid to the scheme, Berry noted.

He explained that the regulator has set out “clear expectations” with regards to pension contributions, and has used its data analytics to identify schemes it believes on the strength of the data, may not be meeting its expectations.

"We are further narrowing down the range to schemes who we believe are about to do their valuation in the next year, because we think that's where our intervention with them might have the most impact. We've identified about fifty or so such schemes that we think might be right for a little probing exercise,” Berry explained.

"We will be writing to them, saying 'dear scheme, you are in this cohort, we have these concerns, what are you going to do about it', or in regulatory language, how do you propose to address these concerns in your forthcoming actuarial valuation."

Trustees will have two months to respond to the regulator, and if the response is satisfactory, TPR will “back off” and wait to see what the valuation results are like. However, if the response is unsatisfactory or is not received, TPR will “ramp up interaction”.

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