The Tortoise and the Hare Approach to Pensions Change
If you were expecting The Pensions Regulator’s (TPR) response to consultation on the Future of Trusteeship and Governance to create headline news, then you will have been disappointed.
The response feels like more of a “holding document”, designed to let the pensions industry know that TPR has taken away a lot of action points but needs time to address its “to do” list.
Speed is not always a good thing. Some of us remember the desire for rapid change following the Maxwell scandal in the early 1990s, when the government and the pensions industry were buzzing with the need to “do something”. The “somethings” were largely enshrined in the Pensions Act 1995 – and it is fair to say that some of the somethings did not stand the test of time. Remember the Occupational Pensions Regulatory Authority? And the Minimum Funding Requirement? Many provisions of the revolutionary Pensions Act 1995 were abolished or amended by the Pensions Act 2004.
The Future of Trusteeship and Governance consultation contained a mixed bag of issues – some technical and some behavioural. The technical areas could and should be moved along as soon as possible and TPR has put timescales alongside many tasks (our newsletter sets these out). Behavioural issues are more difficult to deal with – shifts in culture do not tend to happen overnight – if they are forced, they can become uncomfortable.
Take the issue of “diversity” for example. It is generally accepted that decision making processes are improved when a diverse group of people is involved – but “diversity” means different things to different people. TPR has announced its intention to form and chair (at the outset) an industry group, to define what is meant by diversity in the pension trustee context and to encourage good practice. This approach must surely be better than TPR imposing requirements for trustees to report on the steps that they are taking to increase diversity (although there was, apparently, an even divide among consultation respondents on this point). As an aside, if you are interested in being on the industry diversity group, you have until 29 February to apply to TPR.
When I was reading the consultation response, I was reminded of Aesop’s Fable of The Tortoise and the Hare. TPR has wisely retreated into its tortoise-shell in taking time over trusteeship reform, which is not necessarily a bad thing, remembering that the Tortoise was victorious in the end. But we also need TPR to be a Hare at times, to move swiftly through the consolidation of the unwieldy codes of practice, to set meaningful (but not burdensome) TKU standards and to work on solutions for defined contribution arrangements with guarantees.