Over a third (34 per cent) of pension professionals believe that the cost of regulation is too high and are concerned about its increasing cost, The Pension Management Institute (PMI) has revealed.

Its latest PMI Pulse survey also found that more than half (55 per cent) were “dissatisfied” with the direction of pensions policy and nearly a third (31 per cent) did not expect The Pensions Regulator to focus on the “right areas” in the first half of 2020.

However, over a third (35 per cent) were optimistic about the direction of pension policy and 39 per cent thought that the cost of regulation was “about right”.

More than a third (37 per cent) of respondents thought that Pension Minister Guy Opperman’s recent letter on ESG to the 50 largest pension schemes set a “worrying precedent”.

Despite this, 26 per cent said that they welcomed the development and 15 per cent believed that it was acceptable only in this case.

Commenting on the findings, PMI president, Lesley Carline, said: “While we of course welcome appropriate regulation and an increased focus on ESG across our sector, we need to bear in mind the extra costs this might bear on pension schemes.

"The protection of scheme members’ funds should remain the top priority and obstacles to achieving positive member outcomes should be thoroughly examined.”

Concerns over the transparency of appropriate funding models were also registered, with 39 per cent saying that the ideal model was a levy based on funds under managements, while 21 per cent felt a per member levy was most appropriate and 14 per cent believed it should be by arrangement type.

Carline added: “It is imperative that we see increased transparency around any regulatory costs that may negatively impact the costs of levies for schemes and leave them out of pocket.

“It’s important that all schemes consider integrating ESG principles into their investment portfolio, although we again recommend that targets are achievable, particularly for smaller schemes with less financial clout.”

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