Pensions Restructuring Professionals Think That The Pensions Regulator And The Pensions Protection Fund Should Merge

20 September 2017

TPR And The Pensions Protection Fund Should Merge A new survey of pension restructuring professionals by law firm Taylor Wessing has revealed that many believe that The Pensions Regulator and the Pension Protection Fund should be combined into one streamlined body.

There have been a number of high-profile insolvencies in the past three years and this has thrust The Pensions Regulator and their role into the spotlight, and in the run-up to the latest general election, PM Theresa May vowed to beef up the watchdog with powers to block mergers and acquisitions involving pensions.

"A Conservative government led by Theresa May will give the Pensions Regulator the power to scrutinise takeovers and unsustainable dividend payments that threaten the solvency of a company pension scheme. Under our plans, any company pursuing a merger or acquisition valued over a certain amount or with over a certain number of members in the pension scheme would have to notify the Pensions Regulator, who could then apply certain conditions."

The survey asked pensions restructuring professionals their thoughts on any such impending legislation and one of the main takeaways of the report was the fact that 73% of those that answered said that they were in favour of merging The Pensions Regulator and the Pensions Protection Fund. "There's a view that it's a waste of time and resources to deal with two separate organisations that are trying to achieve inherently the same thing," said Mark Smith of Taylor Wessing.

However, whilst both organisations do have an aligned interest, the practical case for combining them is perhaps less convincing. Back in 2004, the Department of Work and Pensions carried out an extensive consultation and decided that it was better to establish two separate organisations, with the Pension Protection Fund having its primary focus on the management of its fund and The Pensions Regulator having a wide variety of other functions.

There is a will that some changes should be made, with 56% of respondents saying that the regulator's powers are fine as they are but that they needed to change the procedures that they have to use them. There was also some scope for increasing the regulator's powers over corporate transactions. The report concludes:

"Whilst the shadow of Brexit and preparation for that means it is unlikely that we will see new law in the short term, it is clear that there is a desire for more flexibility around how certain aspects of deals with the Regulator and the PPF are approached. In contrast, there is little or no appetite from those we approached for the Regulator to be handed punitive powers, but some considered that clearance should be mandatory in certain circumstances. Clearly, there seems to be a political will for the Pensions Regulator to be given more tools and it will be interesting to see if that ever comes to pass and if so, whether the Regulator has the resources to use them effectively."

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