A Department for Work and Pensions call for evidence has revealed little support for giving The Pensions Regulator an additional statutory objective.
The exercise, which closed on 21 February, explored the practicalities of adding a requirement to "consider the long-term affordability" of recovery plans to sponsoring employers, to the watchdog's existing objectives.
But many responses rejected the idea as unnecessary, costly and potentially counterproductive. Even organisations that had lobbied for a new objective were unhappy with the "narrow" proposal put forward by the DWP.
Indeed, insiders claim the department was not keen on the proposal, unveiled by Chancellor George Osborne at the Autumn Statement, and had sought to steer respondents away from supporting it.
Unnecessary and burdensome
Many did not require this nudge. In its response, the Association of Consulting Actuaries says there would be "no material advantage" to adding another objective. It says clarifying how the regulator's existing objectives should be interpreted would be more productive.
The response adds: "Generally, multiple objectives seem unlikely to create a better regulatory regime, particularly when they can be viewed as pointing in many directions."
The ACA also recognises that the need to consider affordability and take a "holistic view" about the prospects of the sponsor are already implicit in the regulator's objectives to protect member benefits and the Pension Protection Fund.
Pension Insurance Corporation general counsel Louise Inward agrees with this point and adds: "Giving TPR a specific objective is unnecessary and will impose a massive amount of additional work on the regulator."
Inward is also concerned that focusing more on long-term affordability could actually lead the regulator to wind-up more schemes whose long-term future was in doubt.
In its response, the Society of Pension Consultants urges the DWP to better equip the regulator to meet its existing obligations in a way that is more tailored for individual schemes.
"If the regulator had the resources to directly engage with more schemes during their valuation process, solutions on deficit recovery more directly applicable to specific employers and schemes would probably be easier to find, without a further statutory objective," it states.
Organisations that had pushed hard for a new objective welcomed the call for evidence, but are far from happy with the wording of the proposal.
National Association of Pension Funds head of research Mel Duffield says it is too narrow. "Our preferred wording for the objective would be ‘to promote good pension provision and to ensure the health and longevity of pensions'," she says.
She argues this would be more likely to achieve the aim of "making sure defined benefit schemes do not act as a brake on growth" and provide a stronger balance for TPR's existing objective.
Confederation of British Industry senior policy adviser Mario Lopez-Areu says focusing on affordability is the wrong approach. He wants DWP to make TPR more flexible over technical provisions, rather than pushing for a near zero risk discount rate.
"Employers should be able to look at one thing, which is a strong employer covenant, rather than full funding of the scheme at all times," he adds.
So with the industry expecting an announcement on the regulator's objective and discount rate smoothing in the budget later this month, DWP still seems to be some way from finding a proposal that will win friends.
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