Demands from The Pensions Regulator (TPR) for NOW: Pensions to overhaul its administration system have led to the pension contributions of hundreds of thousands of people being collected and invested.
TPR gave the trustee and trust manager of NOW: Pensions a deadline to fix serious and persistent administrative failings with the pension scheme that had led to problems with the collection and investment of contributions. In April 2016, the pension contributions of almost one in three of the master trust's members – an estimated £18 million affecting over 265,000 people – had not been collected, and there were ongoing problems both with the collection of contributions and with ensuring the correct amounts were invested for members.
TPR directed the trustee and the trust manager (NOW: Pensions Ltd, or NPL) to resolve these issues by serving them with an improvement notice and third party notice respectively.
As a result, NPL has worked closely with employers to collect outstanding contributions. It has moved all of its members onto a purpose-built platform, improved the member data it holds and has rebuilt the data records of more than 350,000 of its members. All of the contributions due to these members have now been collected and invested.
TPR is now satisfied that the trustee and NPL have taken all reasonable steps to comply with the notices. While there are still some cases of outstanding contributions, these largely relate to instances when employers have become insolvent. NPL is working proactively to address these cases and TPR is continuing to monitor the progress being made.
Nicola Parish, TPR's Executive Director of Frontline Regulation, said: "When we launched our investigation into NOW, the master trust had significant administration problems in the way it was handling data.
"In particular, its failure to collect contributions was causing problems for employers and the pension pots of members were not growing as they should have been. This was unacceptable.
"Pension schemes, including master trusts, should be in no doubt that we will act if we become concerned about the way they are being run. We will not accept failings that put members' savings at risk."
NPL is making good any investment loss suffered by members because of its administrative failures. Where losses to member benefits have occurred due to employers becoming insolvent, NPL will provide compensation if the losses have been caused by NPL.
The trustee and NPL have also put systems and processes in place to monitor contributions, and TPR is continuing to work closely with the trustee to ensure that it is correctly reporting the late collection of contributions from employers, as it is legally required to do.
TPR fined the trustee £50,000 in November 2017 for failing to ensure that all employee and employer contributions were collected and invested promptly over the period from 6 April 2015 to 8 August 2017, and a further £20,000 in January 2018 for failing to keep some members properly informed.
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Notes to editors
- Read the full report on this case, including a timeline of events, in regulatory intervention reports.
- Section 13 of the Pensions Act 2004 gives TPR the power to issue an improvement notice to persons (typically the trustees or managers of pension schemes) who are in breach of obligations under pensions legislation. The notice orders those named to take specific action. Section 14 of the Act gives TPR the power to issue an equivalent notice, called a third party notice, to any third party whose actions contribute to (but do not themselves constitute) a breach of pensions legislation.
- In this case, the notices directed that NPL (the scheme's trust manager) and the trustee had to complete a number of steps by specific deadlines. These included clearing a backlog of pension contributions that had not been collected or invested as a result of administrative issues, introducing new internal processes to prevent similar situations from occurring in the future and agreeing a scheme of compensation for affected members.
- The fines imposed on the trustee were i) a £50,000 penalty under regulation 28 of the Occupational Pension Schemes (Charges and Governance) Regulations 2015 for a failure to ensure core financial transactions were being processed promptly and accurately as required by regulation 24 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996, and ii) a £20,000 fine under section 10 of the Pensions Act 1995 imposed by the Determinations Panel (DP) for a failure to report some late payments to members as required by section 49(9) and section 88(1) of the Pensions Act 1995.
- The DP is a committee of TPR. It operates separately from other parts of the organisation, including TPR's case teams. The DP has a separately appointed membership and legal support. This enables it to make independent and impartial decisions. The DP considers all the evidence before it and provides each party with reasonable opportunity to present their case. Members of the panel are independent of TPR's case teams and are not involved in the investigation process.
- TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members' benefits; to reduce the risk of calls on the Pension Protection Fund; to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of TPR's functions under Part 3 of the Pensions Act 2004 only).
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