The Pensions Regulator has put a dampener on the Pensions and Lifetime Savings Association’s (PLSA) desire to merge the UK’s defined benefit (DB) schemes, saying the proposals leave a lot of unanswered questions.
Speaking at the PLSA investment conference in Edinburgh, TPR chief executive Lesley Titcomb described the PLSA DB Taskforce’s aspiration as “an interesting work in progress”, but appeared unconvinced and non-committal as to whether TPR would regulate the structures.
It comes after the DB Taskforce published its latest paper which suggested merging the UK’s DB schemes representing £1.5trn into superfunds in order to reduce risk to members’ benefits.
Titcomb said: “I’m not sure I share the view that the DB sector is systemically failing. As a regulator we are seeing a number of stressed schemes out there, but is there a systemic problem? No.”
And she said it was not yet clear in her mind whether a merger would help the watchdog tackle the most stressed schemes, particularly if those schemes needed to be 90% funded before they could move into a superfund.
“It is great you have focused on the regulatory challenge, but supervision of an entity such as a superfund is very different proposition to the supervision of something like a master trust,” she said. “If you think about it in financial services terms it is the difference between prudential regulation and conduct regulation.
“I’m not saying we couldn’t or wouldn’t do it, but I think we need to recognise that it is a very different proposition… [it is] interesting work in progress but lots more questions to come.”
