Out-Law News 2 min. read
10 Jul 2012, 3:40 pm
In its annual report (116-page / 1.2MB PDF) for financial year 2011-12, the Pensions Regulator said it had only spent £30.1 million - £12m less than budgeted – over the course of the year as a result of under-staffing and delays to the Government's schedule for automatic enrolment on workplace pension schemes.
As a result, the watchdog said its planned work on potentially introducing a 'lighter touch' regulatory regime for defined benefit pension schemes, "based on our enhanced understanding of DB scheme risk profiles", had been shifted into the next year while priority was placed on casework.
The Regulator had previously said that its long-term strategy in this area needed further work because "funding risks in most schemes are becoming better managed". It had intended to set out the detail of a proposed new approach last year, according to Financial News.
Pensions law expert Simon Tyler of Pinsent Masons, the law firm behind Out-Law.com, said that the combination of a budget cuts and several "sudden calls on its resources" had had an impact on its resources.
"The Regulator has rightly put off some of its long-term strategy decisions, and concentrated on keeping the show running with minimal disruption," he said. "Although the introduction of 'light-touch' regulation may sound appealing, quite how light-touch this could in fact have been in the current climate had the Regulator been able to introduce it is another matter."
In the report, the Pensions Regulator's chief executive Bill Galvin said that each of its three lines of business had had "notable achievements" over the previous financial year, including the work of its defined benefit team on the high-profile Nortel and Lehmans cases concerning the priority of pension payments on a company's administration. It has also been extensively involved in the regulatory landscape both in the UK and EU, including the proposed introduction of EU-wide solvency standards for pension schemes and the impending introduction of automatic enrolment for UK workers.
"Perhaps more so than in previous years, we have needed to adapt and respond to events and deliver significant new pieces of work not anticipated in our Corporate plan," he said. "The extent of the reactive work has had an impact on our ability to deliver everything in our 2011-12 plan. We have ... been subject to constrained recruitment and tight controls on public expenditure which has resulted in us operating over the year, on average, with almost 20% fewer staff than planned in the budget. This has reduced our resilience in the face of the unplanned events."
The organisation has, however, filled 185 roles since restrictions had been lifted, which Galvin described as "a significant achievement that sets us much better" going into the next financial year. It has pledged to improve customer response times and to focus more on its relationship with fellow financial services regulators, in particular the Financial Services Authority (FSA) and its successors.
From 1 October companies with more than 250 employees will have to automatically enrol 'eligible jobholders' aged between 22 and the State Pension age who are earning more than £8,105 a year into a workplace pension scheme which meets minimum regulatory requirements or the National Employment Savings Trust (NEST). The regulator has already written to 2,900 large businesses employing over 10m workers, and 137,000 advisers and other intermediaries, to ensure that their preparations for automatic enrolment are on course.
