Compliance July 31, 2006

UK Pensions Regulator Chairman Says 'So Far So Good' for its Inaugural Year

July 31, 2006 (PLANSPONSOR.com) - The chairman of UK's Pensions Regulator admits the agency has a long way to go with only a year under its belt, but vows to push for risk-based regulations and "go with the grain of the market," in terms of deficits.
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“We aim to follow the principles of better regulation, working in a risk-based way,” said Chairman David Norgrove, in a press release on the agency’s annual report. “We also want to go with the grain of the markets, because pension deficits will best be tackled through market pressures alongside the work of trustees,” he added.

The regulator published in April a three-year strategy  that reinforced its commitment to a risk-based approach to the regulation of pension plans, which included strengthening the funding of defined benefit plans; improving the governance of work-based pension plans; and reducing the risks to members of defined contribution plans (See UK Pensions Regulator Sets Three-Year Strategy ).

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According to its annual report released this week, the UK pensions regulator predicts that if the number of active members in DB schemes declines at its current rate, the number of active members of occupational DB and DC schemes will be about equal by 2012.

The agency, which regulates the pension industry in the UK, was launched in April 2005, as an outcome of the Pensions Act of 2004. For the fiscal year April 2005 to April 2006, the regulator posted a £2.57 million gain.

Some of the accomplishments the regulator touts in its  annual report are:

  • Publishing a medium term strategy, which establishes the Pensions Regulator’s active, risk-based approach to regulation.
  • Setting up a clearance process for businesses involved in corporate transactions where there is an underfunded defined benefit pension scheme;  
  • Publishing guidance and codes of practice in June (See UK Pensions Regulator Issues Funding Statement Guidance ).
  • Launching a free online trustee  training kit .  

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