Alistair Russell-Smith, Head of Corporate DB at Hymans Robertson comments on the DWP’s “Protecting DB pension schemes” consultation to improve the powers of TPR.

“It is vital that stronger powers for The Pensions Regulator are not held up as a cure all for the industry. Some of the changes proposed may be easy to implement, such as stronger rules and powers, but we have to be careful this doesn’t give false comfort that it’s ‘job done’. Real success hinges on the softer things, such as behaviours, confidence and ultimately the appetite for TPR to act.  These will almost certainly prove harder to change but we cannot risk diverting focus away from the issues before there is sustainable change in behaviours.

“We have long been of the view that TPR already has the necessary powers to hold sponsoring employers to account over the health of their pension scheme and to ensure that members are always prioritised before shareholders. However, we now need to see evidence that it is willing to put those powers into practice. A tougher Code of Practice as a result of this consultation will help, but we shouldn’t forget  that TPR has existing strong powers and make them easier for it to access and execute.  The work of toughening up TPR has already begun. Assertive intervention, directive funding guidance and recent prosecutions have shown that it is willing to pursue failing employers.

“The Government also needs to reflect on TPR’s irreconcilable objectives to promote sustainable economic growth and protect pension schemes and the PPF.  Carillion, BHS and Tata Steel have swung the legislative pendulum heavily towards protecting members.  However, any sluggish economic performance in the future would swing this pendulum back to protecting business growth and tax revenues.  Both the industry and regulators need consistency across economic cycles, especially when dealing with multi-decade pension issues.

“Frankly, it’s simply impossible to say if current powers are sufficient because they just haven’t been used enough. There’s no point in having sharper teeth if you’re reluctant to bite.”