Isn’t pensions regulation there to protect members?

This is what I always thought it was for. Some secondary concerns such as protecting the taxpayer and the PPF but fundamentally there to protect members?

It’s also the first objective of the Pensions Regulator (tPR) “to protect the benefits of members of occupational pension schemes”.

So when it comes to enforcing regulation you’d think that these fundamentals would be at the heart of it.

Not so it seems.

I’ve come across a scheme recently (and I should perhaps stress at this point that these are my views rather than the views of anyone involved) who changed their scheme accounting date by 1 month to align with the company year end. This was also at the time of the next valuation and would lead to a 3 year 1 month period since the last valuation.

So tPR’s views were sought on it being OK to carry out the valuation at this revised date. Commitments were also given to ensure things were done within original timescales. The response was that they couldn’t waive the requirements but would consider each case on its own merits. Given this, and awareness of another scheme that had done this, the Trustees decided to proceed with the valuation.

Time passes by

Some time later, and 9 months after submitting the valuation, tPR sent further correspondence stating that they couldn’t accept the valuation and had no choice but to request the valuation was redone at the old effective date.

Follow up discussions were had. All understand tPR can’t authorise a breach in the law but perhaps it could give an idea of what action might be taken. Nope. All communication has been utterly absent of any pragmatism. In fact they even suggested that as a pragmatic regulator they wouldn’t require it to be done within the original 15 month timetable – useful given already 24 months on!

Just 4 months before the next valuation date the Trustees had to concede that tPR will not back down and that they needed to do a valuation with an effective date of almost 3 years ago. This is despite the fact that it will be immediately superceded by the valuation that had already been done with an effective date just 1 month later.

Exactly how is this in the interests of members?

Or anyone in fact?!

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Statutory nonsense

We had internal training this week on the latest bit of legal loophole nonsense threatening to cost pension schemes a lot of money in legal costs. The issue is that of the Statutory Employer and has come about following the Pilots case (and others).

Essentially it seems that depending on where you look in pensions legislation there is a different definition of “employer”. The differences are subtle but enough to keep lawyers entertained for a while. The result of this is the bizarre situation that a company could believe it is responsible for the scheme, pay deficit contributions and levies but actually not be liable for any section 75 debt. Worse still the members of such a scheme could end up not being entitled to compensation under either the PPF or FAS!

So obviously rather than quickly tidy up the legislation it appears instead that all pension schemes will need to go through the process of identifying their Statutory Employer – often at significant legal cost. Then when all that money has been spent consideration will be given to extending FAS to catch those falling down the cracks.

Luckily I’ve saved everyone this trouble and drafted some new legislation. I call it the MJR Pensions Act 2011:

“For the purposes of xxx (list relevant acts/regs) in place prior to the effective date of this Act (the “Acts and Regulations”) the definition of employer is extended to include the other definitions included in the Acts and Regulations.”

Why can’t it be this simple for a change?