It helps us to:
- monitor schemes closely
- clearly outline what we expect
- act quickly where we have concerns
The actions we take will depend on the risks that we identify.
Regulatory initiatives and applications
Regulatory initiatives involve us contacting a large number of schemes about a particular risk and engaging with those that have not adequately addressed the risks we identified.
We seek assurances from the schemes about how they will assess the risk, and if their response does not adequately address it we will engage directly with the scheme or other stakeholders to do so.
We also deal with applications, including those for clearance and regulated apportionment arrangements. We review all applications we receive and respond promptly, recognising commercial timescales of the underlying transactions.
Relationship supervision allows us to extend our reach across the market and develop relationships with strategically important schemes.
It enables us to monitor schemes more closely, outline our expectations, and prevent problems from developing in the first place. Supervision involves building strong relationships with schemes regardless of whether they trigger our traditional risk indicators.
We supervise DB, defined contribution (DC) and public service pension schemes using a range of criteria to select them. These criteria include:
- previous interactions with us
We assess the risks and strengths of the scheme by reviewing its management and governance, systems and processes, IT and infrastructure, control functions, administration and member communications and, for DB schemes, funding. We may not need to look at all these areas for every scheme.
We then set out our findings in a supervisory report and ask the scheme to create an action plan to address the recommendations we make. We have regular meetings to review their progress and, where necessary, refer issues to our enforcement teams to take action.We expect schemes to be in Relationship supervision for at least 18 months, and will periodically review how long they should remain in supervision. We meet most schemes at least twice a year - having a close working relationship enables those running schemes to be open and transparent with us and have a dedicated point of contact at TPR.
By the beginning of 2020 the department will also be responsible for the supervision of master trusts.
Event supervision and rapid response
Our event supervision and rapid response teams respond quickly to reports of events which pose increased risks to schemes. This will generally involve events that affect the employer covenant supporting defined benefit (DB) schemes, particularly corporate transactions or corporate distress.
We assess the impact of an event on a particular scheme and on our statutory objectives. Where we get involved, it is initially through the trustees as they are the first line of defence for savers and, if appropriate, we will engage directly with trustees, employers and other stakeholders to protect the interests of members.
Our intelligence team identifies schemes facing heightened risks and we then contact the trustees very quickly to look at key areas such as:
- how they are assessing the likely impact of an event on the scheme
- whether they are getting the right information and advice
- what protections they already have in place and if they can be improved
We establish whether the trustees have the right skills, experience and advice to address the particular issue they are facing and assess the level of risk to members. Some trustees will have very little experience of certain events so they benefit from our experience, but we are not a substitute for effective trusteeship.
Where required, our event supervision team will engage more directly in the situation faced by the scheme. Our team members have significant experience of corporate transactions and restructuring and will engage with relevant stakeholders to ensure the scheme’s position is appropriately protected.