7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.
In this 7 Days
- CMA publishes provisional decision on the investment consultancy market
- Consultation on pensions cold calling ban published
- PPI publishes report on the implications of living longer
- CEO of the Single Financial Guidance Body appointed
- TPAS Annual Report and Accounts 2017/18 published
- TPR warns of fraudsters claiming to be from the Regulator
- TPR to carry out short notice auto-enrolment inspections on employers
- TPR blogs published
The report proposes a series of recommendations to deal with market issues, including the information firms make available to trustees, the appointment of firms and regulatory oversight and guidance.
The CMA’s report identifies competition problems within the investment consultancy and fiduciary management markets. Its provisional findings include:
- around half of pension schemes choose the same provider for fiduciary management that they use for investment consultancy. This means companies which offer both services have an advantage over other firms, when it comes to getting this business from existing clients
- a number of pension trustees have low levels of engagement with providers in the sector when choosing their first fiduciary manager. Only a third of trustees ask firms to compete for their business through a tender process, meaning little competitive pressure
- pension trustees often do not have sufficient information on the fees or quality of these services to be able to judge if they’re getting a good deal from their existing investment consultant or fiduciary manager, or if they could do better elsewhere.
The CMA has therefore proposed a number of changes to these markets to deal with its concerns, including:
- pension trustees selecting their first fiduciary manager must run a competitive tender. Trustees who have already appointed a fiduciary manager without doing this must also put the role out to tender within five years
- fiduciary management firms must provide clearer information on fees and how they have performed for other clients, so that pension trustees have the information they need to make meaningful comparisons between providers
- the CMA is also making recommendations for new guidance from TPR, to provide trustees with advice on how to choose and scrutinise providers. It is also proposing that the government broadens the FCA’s regulatory scope, to ensure greater oversight of the industry.
The CMA is inviting feedback on the provisional decision report by 24 August 2018. The statutory deadline for the CMA’s final report is 13 March 2019. Further information can be found on the CMA’s market investigation case page.
On 20 July 2018, HMT published a consultation seeking technical views on draft regulations banning pensions cold calling, to ensure they meet policy objectives. This follows the previous consultation on pension scams and the Government’s response.
The Government states that it is implementing a ban on pensions cold calling because this is “the most common method used to initiate pension scams”. The draft regulations in this consultation relate only to a ban on live, unsolicited direct marketing calls relating to pensions.
The consultation closes on 17 August 2018. Subject to Parliamentary timetabling, the intention is to lay the regulations in autumn 2018.
The PPI has published the first in a series of reports, exploring what pensions and retirement might look like in the future in terms of wellbeing and wider social, economic and demographic trends and projections. The research links pensions, retirement and long-term saving to wider aspects of social life including health, economic and social wellbeing, and general socioeconomic, cultural and economic conditions.
On 16 July 2018, the DWP announced that John Govett has been appointed as CEO of the Single Financial Guidance Body. He will take up the post from October 2018 for a four-and-a-half year term, alongside the recently-announced chair Sir Hector Sants.
TPAS has published its Annual Report and Accounts, explaining the service’s activities and finances for the year ending 31 March 2018. This covers the final period during which its dispute resolution function remained with TPAS, before its transfer to TPO.
TPAS reports that in 2017/18, its customer volumes remained high – it helped 173,442 individuals, “broadly the same number of customers as the previous year”.
TPR has issued a press release warning that it has received reports of pension holders being cold-called by individuals who have posed as TPR staff and offered “free pension reviews” – a common warning sign of a scam. TPR reminds readers that it never cold-calls individuals about their pensions.
It has referred the cases to the ICO for investigation.
TPR has announced that it plans to carry out “short notice inspections”, targeting employers who are suspected of providing false or misleading information to TPR about how they are meeting their auto-enrolment duties. Employers who have been given an escalating penalty notice for non-compliance but have still failed to meet their responsibilities, along with a small number of employers selected at random, will also be subject to the spot checks.
TPR’s Director of Automatic Enrolment, Darren Ryder, said: “there are tell-tale signs indicating an employer might not be telling the truth. We can also detect employers who are failing to meet their automatic enrolment duties despite being issued with a penalty and we will take action if we suspect either of these is the case.”
TPR published a blog post on 17 July 2018 from its CEO Lesley Titcomb, titled “New powers help bring balance and confidence to pensions”.
The post welcomes the changes to TPR’s powers proposed in the Government’s recent DB pension schemes White Paper, and encourages readers to respond to the consultation. It looks at the “complex decisions” TPR has to make to maintain the balance between a sponsoring employer and the funding needs of a scheme, and addresses how TPR intends to make the required changes: “We recognise that in the past we may not always have got this balance right. So going forward, this is in an area where you can expect to see us being clearer, quicker and tougher. If we see the balance between the sponsoring employer and the pension scheme going adrift then in simple terms an alert will be triggered at TPR and we will intervene, including using our enforcement powers if necessary.”
TPR has also published a guest blog written by Andy McKinnon, CFO at the PPF, on “protecting the DB pensions universe”, the work of the PPF, and the interplay between the PPF and other pensions-related bodies.