Robin Ellison asks how we can simplify scheme return documents.
We all know that defined benefit schemes (except in the public sector) have a limited life and if interest rates start to rise, and buyout costs fall, even more limited. And we know that The Pensions Regulator (TPR) is presiding over the death agonies of such schemes.
So it is not unreasonable that it seeks to keep an eye on these dying schemes, if only to have a feel for the exposure of employers to the Pension Protection Fund through their levies. The fact that pension funds need to report their position on an annual basis can therefore be defended as a sensible thing to do.
But everything in moderation. The latest edition of the recently modified TPR scheme return now runs to 38 pages. Some of these pages come with fairly innocuous questions (name of scheme, address of scheme) which could be but are not pre-populated, and some that are pretty complicated and pointless including, for example, disclosure of a value-at-risk calculation, an exercise that was broadly written off as a sole risk measure after the credit crunch.
Well, why does the regulator need to know the name of the chairman, provided it has a contact name and address of someone to talk to?
It's easy to nitpick the questions; the real issue is why all this stuff is needed – and what is done with it once submitted.
Browsing through the form it is easy to see that considerable thought has gone into it. It is nicely designed, well printed and, if you have the information readily to hand, easy to complete. But now that we are coping with austerity, and that the DWP is having its domestic budget cut by 40%, it might be much appreciated by the industry if the form was cut in size by 40%.
If the previous year's form was available on the TPR website and all that was needed was to amend it where necessary online (using a simple password) and joined up with the PPF's and HMRC's request for information. Its simplification might even play a part in meeting the Red Tape Challenge imposed by central government.
What could go? Well, why does TPR need to know the name of the chairman, provided it has a contact name and address of someone to talk to? Why does it care about AVC membership in astonishing detail? Mildly amusing to know, if you are an anorak, but hardly important for policy or regulatory purposes. And why does it need the Companies House number? No-one else in any other area of activity demands this (by the way, there is a typo in question 9.5). Why does it need to know the name and address of the auditor?
Of course, few trustees can complete this form – it needs administrators and actuaries working together at not inconsiderable expense. Personally, I find it quite useful to have a great deal of information in one form when I am a trustee of a scheme. But the form is not designed for me.
So how could we make things better? One option might be if TPR had the time to sit down with a few trustees, members and practitioners to see what could be cut out of these scheme obituaries, concentrating on what is necessary to know and obviating the nice to know. They could also talk about what could be done to make the task cheaper and easier to complete. If the meeting were in London, I'd be happy to pay for the sandwiches.
Robin Ellison is head of strategic development for pensions at Pinsent Masons
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