The UK Pensions Regulator closed its consultation on its new five-year corporate strategy, following the closure of responses on Monday. The consultation’s sole focus was to improve member outcomes, strengthen governance, fairness and accessibility and establish a streamlined pension journey from enrolment to retirement.
Employers, trustees, and providers could see a shift in regulatory priorities – influencing compliance expectations and workplace pension administration.
Chris Eastwood, CEO of Penfold, believes that the final strategy will formalise a shift in workplace pensions regulation from basic compliance towards better long-term member outcomes. Auto-enrolment has succeeded in getting millions more people saving. The regulator’s next focus looks likely to be whether those savings are actually delivering value, security and income in retirement. Eastwood’s full predictions include:
Prediction one: a heightened emphasis on member outcomes
“The final strategy is likely to focus heavily on whether pension schemes are helping people achieve a sustainable income in retirement,” said Eastwood. “Therefore, employers and providers should expect more scrutiny around value for money, member engagement, communications and the quality of support people receive throughout their pension journey.”
“I expect the regulator to use value for money as a way to raise standards across the market. Schemes and providers that cannot demonstrate good long-term value, strong investment governance and quality member services may face increasing pressure to improve, consolidate or exit.”
Prediction two: pension administration and data quality will move up the agenda.
“With dashboards, digital journeys and AI all becoming more important, the regulator could put greater pressure on schemes and providers to improve data quality, administration standards and digital infrastructure. Poor admin will increasingly be a member outcome issue, not just an operational one,” Eastwood continued.
Prediction three: a push for innovation and added retirement support.
“The consultation suggests that the UK Pensions Regulator wants to support innovation, but only where it is clearly in members’ interests. I expect the final strategy to encourage responsible use of technology and AI, while also setting clearer expectations around governance, transparency and risk management.
“The strategy is likely to look beyond accumulation and focus more on what happens as people approach and enter retirement,” added Eastwood. “This could mean greater expectations on providers to support at-retirement decision-making, offer clearer pathways and help members understand how their pension savings can translate into income.”
Prediction four: employers may need to think beyond minimum auto-enrolment duties.
“For employers, the practical implication is that simply having a pension scheme in place may no longer be enough. The direction of travel is towards choosing providers that can evidence strong governance, easy administration, good value, accessible communications and a better experience for employees.
“Overall, the July strategy will likely signal a more proactive, outcomes-led regulator, which should be positive for savers. But it will also raise the bar for employers, trustees and providers over the next five years,” concluded Eastwood.
