TPR and FCA update joint regulatory strategy amid 'changing pensions landscape'

The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have issued an update to their joint regulatory strategy, emphasising the importance of a collaborative approach in the current environment.

The update identified eight joint workstreams: productive finance, value for money, a regulatory framework for effective stewardship, pension scams strategy, defined benefit (DB) transfer advice, DB schemes and transfer activity, pensions dashboards and supporting consumer decision-making throughout the pensions consumer journey.

Alongside this, the update set out the outcomes that the regulators are aiming to deliver through this work, in an effort to make sure pension savers get "security, value and support from the pensions system".

TPR and FCA highlighted the eight joint workstreams as demonstration of a “fundamental shift” in recent years in the working relationship between the FCA and TPR where the two are now working “hand-in-hand”.

The update also confirmed that TPR and FCA intend to continue to work as closely as possible to carry out these joint workstreams, while recognising that there are other partners who have a significant impact on how industry can deliver good outcomes for savers.

In light of this, the update divided the ongoing work between the regulators into three parts: the joint assessment of risk and harms, such as the work to tackle pension scams through the Pension Scams Action Group; joined-up working on cross-sector initiatives, such as work and pensions dashboards and value for money; and communications around joint work, such as joint communications around DB transfer concerns.

“On areas of joint strategic interest — recognising our different frameworks — where appropriate we will consider from the outset how we will work jointly, whether through consultations, communications, supervisory approaches or new regulations, developed in partnership with the DWP,” the update continued.

“It is only by working seamlessly together as one regulatory family, in collaboration with industry, that we can deliver the consistent regulation and outcomes that the public expect.

"We will continue to work closely together so savers achieve the same good outcomes regardless of their pension type.”

Although the regulators acknowledged that they cannot directly address adequacy concerns, the update emphasised that TPR and FCA are committed to working with all stakeholders, including government, to support savers to achieve good outcomes.

The update also suggested that this co-ordinated action is particularly important in the current macroeconomic environment, warning that the challenges of the ongoing cost-of-living crisis could change saver behaviour, with some potentially reducing contributions.

This is not the only factor, as the update stated that "the landscape has changed post Covid-19", stating that "further profound changes caused by trends such as geopolitical insecurity, technological developments, and the net zero transition — are transforming markets and the world around us".

Indeed, in a blog post, TPR chair, Sarah Smart, emphasised that although the past four years saw an increase in retirement savings, “we have been hit with a global pandemic, faced war tragically returning to Europe and seen the return of high inflation and higher interest rates and a cost-of-living crisis”.

“These threats to our personal and financial wellbeing reinforce the need for savers to be at the heart of what we do,” she continued.

“I want to make a promise to savers. Whatever pension scheme you are saving into, FCA and TPR will do our very best to protect you from harm and ensure your scheme seeks to deliver real value for your investments.

“The only way we can make good on this promise is continued and deepened collaborative working with our closest partner, the FCA. That’s why today, together with the FCA, I’m pleased to publish an update to our joint regulatory strategy.”

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