The majority of defined benefit (DB) savers may sit in "well-run, larger schemes", according to The Pensions Regulator (TPR), but the watchdog has warned it will act on smaller schemes that are "lagging behind".
The watchdog said smaller DB schemes tended to display "poorer governance standards" and have trustees who place less emphasis on assessing the fitness and proprietary of new trustee board members. It also found smaller schemes perform worse than their larger counterparts on meeting the principles of its funding code - in particular around taking and managing risk.
TPR said it was stepping up its "proactive involvement" with smaller schemes, as part of its new regulatory approach, in order to assess their performance in key risk areas, which include governance, investment and funding.
The regulator also said it would provide "clear, directive feedback to the trustees of all small schemes", warning those who do not act on the feedback may face further action.
"Under our clearer, quicker and tougher approach, schemes in all segments of the pensions landscape can expect to receive greater scrutiny from us," said TPR executive director of regulatory policy, analysis and advice David Fairs.
"In particular, we are taking a far more directional approach to small schemes to drive up standards and ensure all members are in well-run schemes."
Acknowledging the challenges of beinge a scheme trustee, Fairs said TPR would continue to help trustees of schemes of all sizes meet the standards it expected and make a positive difference for their members.
He added: "We are reviewing and streamlining our existing guidance to make sure our expectations are clear. This includes outlining how we will be quicker to take enforcement action where standards are not being met by using our existing powers more often, and any new powers that may be provided by government."
This comes after PP revealed yesterday (11 September) that the regulator is set to toughen its approach to single-employer defined contribution (DC) trusts and will pilot two initiatives to boost governance over the coming months.
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