TPR pledges to cut master trust capital requirements and create innovation 'hub'

The government set out its new approach to ensure regulators and regulation support growth this morning (17 March) – publishing a number of pledges.

Alongside this action plan, the government also published a range of pledges from regulators – including the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and TPR – to support this effort.

TPR made four specific pledges. It said:

• It would review the amount of capital reserving that master trusts are required to hold, with a view to "safely freeing up millions of pounds for schemes" by the end of 2025/26.
• The regulator also said it would develop an innovation framework and criteria to trial pensions innovation ideas and launch a hub to test a variety of innovation services with the market by the autumn of 2025.
• The watchdog said it would reduce unnecessary regulatory burdens and improve data and data-sharing by monitoring its engagements with schemes and employers seeking to reduce unnecessary regulatory burden whilst maintaining current high levels of compliance. It said that, as part of this, it will monitor the quality and value of regulatory interaction and make sure that new interventions are not just clearly linked to delivery of better outcomes for savers but are also efficient and effective in delivery. The regulator said it would also conduct a review of its scheme return and supervisory return data collection requirements by the end of March 2026 to identify options to reduce unnecessary burdens on schemes. Subject to the outcome of the review, the government will consider how and what we capture including amendments to legislation as required.
• Finally, TPR said it would encourage consolidation and consideration of investment in productive assets. It said that, as part of this, the Value for Money framework would bring public disclosure of long-term risk adjusted net returns to help drive competition, growth and enhanced member outcomes. In advance of this TPR said it would drive consolidation in savers' interests and encourage the voluntary disclosure of asset allocation data to shine a light on the relationship between asset allocation and net performance.

Commenting on the regulator's pledges, Spence & Partners UK sales lead Adrian Chapman said: "The general mood music across all regulated industries is for regulators to lighten the burden, remove duplication and encourage innovation.

"This has to be seen as a good thing generally, but consumer protections need to remain robust."

Pensions Management Institute (PMI) chief strategy officer Helen Forrest Hall added: "The PMI supports targeted regulation that fosters high workplace standards through industry qualifications and education, ensuring optimal outcomes for scheme members. We are committed to continuous innovation, exemplified by our Lifetime Savings Initiative (LSI) which has driven actionable recommendations to address barriers to financial security and help build a sustainable UK savings model.

"We welcome TPR's focus on innovation and eagerly anticipate collaborating with the new Innovation Hub, sharing insights from our growing Global Innovation Centre, including the LSI."