The Pensions Regulator (TPR) plans to tackle poor standards among smaller schemes with targeted enforcement action and possible consolidations, it has said.
TPR said some small and medium size pension schemes were found to have “major gaps” in the standards it expects.
It seeks to tackle the issue by overhauling its communication with schemes and using “targeted enforcement action” where schemes are not complying. At the same time it is considering to encourage sub-standard schemes to consolidate where appropriate.
The regulator had conducted two separate surveys on defined contribution (DC) and defined benefit (DB) schemes and found many small DC schemes were not meeting its standards on administration, investments, and value for money, while the issues with DB schemes centred on integrated risk management and fair treatment of the scheme.
It found higher standards of governance and compliance with the principles of TPR’s codes among the larger, better managed schemes, it said.
Acting executive director for regulatory policy Anthony Raymond said: “While some trustees are doing a good job, many trustee boards have failed to act on our codes and guidance to meet basic standards of good governance. Members and sponsoring employers should not suffer because of apathy and we will not stand by and let it continue.
“As part of our commitment to be a clearer, quicker and tougher regulator, we will be stepping up our regulatory action in cases where trustee boards fail to meet minimum legal standards, and we will publish the details of that action.
“We will also continue to examine whether sub-standard schemes should be consolidated with larger, well-run schemes.”
TPR’s surveys were held to gauge how schemes are meeting its expectations and to explore the barriers they face in meeting them.
Overall, it found governance and administration across DC schemes had improved while DB schemes were showing better understanding of its code of practice.
The regulator is also launching its 21st Century Trustee campaign, which aims to support trustee boards maintain and reach standards with a focus on the fundamentals of good governance, later this autumn.
TPR is currently carrying out a nationwide tour of the UK to ensure employers are complying with their automatic enrolment duties.