Corporate Plan 2018-2021 - May 2018 - The Pensions Regulator
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Corporate Plan 2018-2021 May 2018
Contents page
Foreword 3
Our vision and values 5
Introduction 6
Our approach to risk and regulation 6
The pensions and risk landscape 8
Pensions landscape 8
Risk landscape 9
Our priorities 11
Evaluation 16
Outcomes 16
Key Performance Indicators 17
Our structure 20
Financial summary 21
Funding 21
2017-18 financial results 21
2018-19 budget 22
Staff numbers 24
End notes 25
How to contact us back
Corporate Plan 2018-2021 2Foreword
TPR is changing and in this Corporate Plan we set out what we are doing to become a clearer,
quicker and tougher regulator. Over the next year you can expect to see us improving our
effectiveness further by taking action in a broader and more visible way to improve outcomes for
retirement savers. We will ensure our expectations are better understood and use a wider range
of regulatory tools, with the aim of putting things right and keeping schemes on the right track for
the long term so members receive the benefits to which they are entitled.
We continue to see changes in the wider pensions landscape that impact our organisation and the
industry, and create new challenges – for example continued uncertainty in the macro economy
and the significant shift of savings into defined contribution (DC) schemes. The way we work will
undoubtedly need to evolve further to reflect these and other ongoing developments in the sector.
It is important that we keep pace with the evolving landscape, take into account the social,
economic and political environment, and are able to adapt to changing risks. In this Corporate
Plan we set out the direction in which we are heading and the main risks we are seeking to address,
and how our changing approach to regulation will evolve. We are well placed to respond to the
challenge. This plan is also aligned with our joint work with the Financial Conduct Authority (FCA)
to develop our respective pensions strategies, and we expect to update our stakeholders over the
summer on the outcome of this work.
We will be delivering some important work over the course of this three year plan, for instance
driving up standards of trusteeship and stewardship across all schemes, including in public service
(PS) schemes. We are working with professional trustees to develop and maintain professional
standards. Additionally, we are targeting trustees of smaller schemes where they are perhaps less
well-engaged or under-resourced, being clearer with them as to the standards we expect of them
and helping them to reach the standards we expect.
We are also gearing up to authorise the first master trust schemes from October 2018 and to
deliver the ongoing supervision regime. We have been engaging with existing master trusts to
help them prepare for this new framework. We will finalise our code of practice and guidance
alongside the regulations this year.
While DB schemes are no longer the dominant form of provision in terms of numbers of people
saving, they still hold the vast majority of assets. Parliament has given us a mandate to balance
the protection of pension savers, the Pension Protection Fund (PPF) and the needs of employers
to invest and grow their business. We therefore have to make complex decisions on where we
intervene to maintain a balance between a strong employer and well-funded schemes, and we will
continue to insist on effective and integrated risk management.
We clarify our expectations further in relation to DB schemes in our Annual Funding Statement,
which highlights the key issues we see facing schemes which have forthcoming valuations.
Corporate Plan 2018-2021 3Foreword
We welcome the government’s White Paper on protecting defined benefit (DB) pension schemes,
and our new powers to enable us to better deliver on our statutory objectives. We will continue to
work with government to implement the proposals set out in the paper.
Saving into a pension is becoming the social norm thanks to the success of automatic enrolment
(AE), and we will be working to make sure new and existing employers continue to comply with
their legal duties, including the increasing contribution rates in April 2018 and April 2019. We
are also working with the government to take forward the findings and recommendations in the
December 2017 AE review.
Our people are key to delivering our expanded remit and workload. We will increase our
headcount this year by a further 12% and will continue to develop our agile, skilled and diverse
workforce, through the course of this plan. We will also improve our systems and processes, while
continuing to support our staff to develop their skills, knowledge and productivity.
We have updated our Key Performance Indicators for this year, consistent with our intention to
be clearer, quicker and tougher. In implementing our new approach to regulation this year we will
further develop and demonstrate our effectiveness through other appropriate measures of our
performance.
One thing is certain, it will be another challenging year, but we are in an excellent position to take
on those challenges and to address the issues and risks that face us and those we regulate.
Mark Boyle Lesley Titcomb
Chair Chief Executive
April 2018 April 2018
Corporate Plan 2018-2021 4Our vision and values
Our vision is to be a strong, agile, fair and efficient regulator. Through
this we seek to gain the respect of employers, trustees and other
stakeholders.
Together with our partners in the pensions industry, in government and
among employers, we will drive up standards of trusteeship and improve
savers’ understanding of their situation to create better outcomes in
their later life.
We are committed to making TPR a great place to work and doing all we
can to support our people to reach their full potential.
We hold certain values, which we believe are central to the delivery of
this vision, and they are to be:
committed to the pursuit of good outcomes for workplace savers
bold and impartial in our decision-making
alert and responsive to emerging risks and opportunities
supportive of our people
united as one team
Corporate Plan 2018-2021 5Introduction
Our mandate derives from statutory objectives, which are set out in the
Pensions Act 2004, amended by the Pensions Acts 2008 and 2014.
These are:
to protect the benefits of members of occupational pension
schemes
to protect the benefits of members of personal pension schemes
(where there is a direct payment arrangement)
to promote, and to improve understanding of, the good
administration of work-based pension schemes
to reduce the risk of situations arising which may lead to
compensation being payable from the PPF
to maximise employer compliance with employer duties and the
employment safeguards introduced by the Pensions Act 2008
in relation to DB scheme funding, to minimise any adverse impact
on the sustainable growth of an employer
Our Corporate Plan aligns with the DWP’s single departmental plan,
specifically Objective 3: ‘Increasing savings for, and financial security in,
later life’. See more at http://bit.ly/DWP-plan18.
We work with trustees, employers and business advisers of occupational
pension schemes in the private and public sectors, to help them
understand their legal duties and the standards we expect. This includes
working with employers and their advisers to ensure compliance with
AE duties.
Our approach to risk and regulation
As a risk-based regulator with limited resource, the approach we take
is informed by our statutory objectives, which are interpreted through
our corporate priorities and informed by our assessment of the key risks
facing the schemes and employers we oversee.
We judge risks in terms of the threat they pose, the extent to which we
can mitigate them and our risk appetite. This means we will not seek to
intervene in all situations but will prioritise by risk, cost and perceived
benefits in a way that is targeted and proportionate. We will, however,
work to ensure there is compliance with basic duties by those we
regulate.
Corporate Plan 2018-2021 6Introduction
We are also improving the way we use our data and increasing
our horizon scanning and the use of intelligence in order to better
target and prioritise our work based on the risks we want to reduce.
This includes working with our regulatory partners to deliver good
outcomes for retirement savers, and responding to our new remit on
the authorisation and supervision of master trusts. We will continue to
develop our approach over the course of this plan.
We have a wide range of powers that we use flexibly, reasonably and
appropriately. We are likely to take enforcement action where we
encounter wilful or persistent non-compliance, where our earlier efforts
to encourage compliance with the law have not had the desired effect,
We have a
or where we uncover evidence of malpractice.
wide range of
powers that
we use flexibly,
reasonably and
appropriately
Corporate Plan 2018-2021 7The pensions and risk landscape
Pensions landscape
The pensions landscape has evolved rapidly over the past few years and continues to transform, in
terms of its overall size and the types and numbers of schemes available, as well as the risks faced
by them.
Over nine million employees have now been enrolled into a pension as a result of AE, and over
one million employers have now complied with their AE duties. AE has led to a vast increase in DC
memberships and, as expected, employers have been putting their staff into DC contract-based
and trust-based pensions (mainly master trusts) rather than setting up new DB arrangements.
Memberships of occupational DC schemes now exceed those of private sector DB schemes.
Occupational DC membership has increased to 12.6 million – up by 29% over the past year and by
460% since the start of 2012. In the same period private sector DB membership has declined from
12.6 million to 10.9 million. In addition, there are 16.5 million memberships in PS pension schemes.
Around 10 million people are now members of master trusts – with over £16 billion of assets
invested. In 2012 there were around 300,000 memberships of master trusts.
Total memberships in DB and DC pensions
20
18 Private sector DB
16
Number of members (millions)
Private sector DC
(all workplace)
14
Private sector DC
12 (occupational)
10
8
6
4
2
0
2012 2013 2014 2015 2016 2017 2018
Our latest figures show that £5.4 billion was contributed into non-micro occupational DC schemes
last year, an increase of more than 21% year-on-year. The assets in non-micro DC trust-based
schemes amount to £48 billion1 (an increase of 174% since the beginning of 2012), while over £1.5
trillion of assets are held in DB schemes.
Corporate Plan 2018-2021 8The pensions landscape
In 2012, around two-thirds of private sector workplace pension scheme
members were in DB schemes. Of the DC members, two-thirds were in
contract-based schemes which are regulated by the FCA. Since the start
of AE, DB membership has declined by 15% to just under 11 million,
while occupational DC membership has increased to over 12 million.
There are now nearly 30 million private sector workplace memberships.
Last year’s plan showed that workplace total DC membership exceeded
private sector DB membership for the first time in 2016. This year’s
figures also show that occupational memberships of DC trust-based
schemes now exceed private sector DB memberships.
Risk landscape
People are typically living longer and spending more of their life in
retirement, although the rate of increase is showing signs of slowing down.
While the majority of pension assets remain in DB schemes, the closure
of a number of these schemes and the impact of AE is increasing the
number of people saving into DC schemes. Additionally, as a result of
the pension freedoms, some retirement savers have transferred from a
DB pension to a DC pension so they can access their savings earlier.
There are a number of macro trends that are influencing our corporate
priorities and the work we plan to do:
1. The impact of changes in the economic and political
environment. We will see challenges for schemes and employers
as the economy transitions to a post-Brexit trading environment. The impact of
Schemes with employers in certain sectors (those with integrated AE is increasing
the number
supply chains or heavy reliance on common standards, for example)
of people
will need to reflect on any potential impacts on employer covenant.
saving into DC
The prevailing market volatility poses challenges for scheme schemes
investments, as well as continuing low interest rates. As we see
continued market volatility there is the potential for fluctuations in
the value of assets, which may also impact confidence in pension
saving.
2. A general shift towards an ageing population. The wider
implications for society of an ageing population, the increasing
numbers of people reaching retirement, and the impact of pension
freedoms, increases the risk of members making inappropriate
decumulation choices. For our approach to DB scheme regulation,
we see heightened risks where schemes do not appropriately
manage their cash flow needs as they mature and move into the
decumulation phase.
Corporate Plan 2018-2021 9The pensions landscape
3. Opportunities and threats from the increased use of
technology. Schemes’ abilities to exploit opportunities around
improvements in technology and automation will be dependent
on their standards of governance, record-keeping and data
management. There will be an ongoing challenge to the pension
sector’s ability to ensure security of information and of assets – the
rise in cyber crime could see pension schemes being increasingly
targeted.
4. As a result of AE, millions of people are saving into pensions
for the first time. Now that all existing employers have reached
their staging dates, we have seen low levels of employees opting
out to date. For AE to continue to be a success, it is important
that those new to pensions have a positive initial experience. At a
micro level, stretched household finances and changes in working
patterns may have a negative impact in the form of individuals’
propensity to save (driving up cessations and opt-outs), particularly
as contributions rise in April 2018 and April 2019. In some cases,
It is
these circumstances could also make people more susceptible
important that
to scams. In terms of the wider landscape, we have seen master
the pension
trusts become the savings vehicle of choice for the majority of new sector has the
members. While this allows members to benefit from scale, it also ability to manage
creates a concentration of risk with the impact of any governance volatility
failures being heightened in these schemes. and risks
These macro trends present a number of implications for the sector and
they increase the importance of the need for resilience and adaptation
within the pensions industry. It is increasingly important that the pension
sector has the ability to manage volatility and risks. These trends also
increase the need for long-term planning and stress the importance of
the sector’s ability to manage risks for the longer term.
A constrained or uneven economic growth environment may have a
disproportionate impact on certain sectors of employers sponsoring
pension schemes.
Our recently published joint strategy discussion document with the FCA
is developing these views further. We will publish our conclusions on this
consultation over the summer.
Corporate Plan 2018-2021 10Our priorities
Our assessment of the risks we see in the landscape, including the key macro risks we set out
above, helps us to develop our priorities for the next three years.
Our priorities remain closely aligned with those in last year’s plan and will continue to evolve,
particularly in light of our ongoing work to strengthen and enhance the way we regulate in the future.
The eight priorities below reflect our current outlook for the next three years (2018 through to
2021). However, the specific activities we have outlined under each priority relate to the 2018-19
financial year.
Enhancing and executing effective regulatory approaches
1 across all schemes
Intervening effectively and efficiently where appropriate
To address the range of risks we see affecting schemes, we will be intervening more widely and
tailoring our approaches to the specific risks and circumstances. This will enable us to use our
resources more effectively and to be clearer in our expectations, quicker to respond and tougher
where we need to be.
To do this, we are developing different regulatory tools and improving the data we hold and the
way we use it. We will also continue to conduct more visits and inspections.
This broader regulatory approach will encompass DB, DC and PS schemes presenting the highest
risk to members.
To help educate the market, we will continue where possible to publicise our regulatory actions.
An example of this will be our continued programme of thematic reviews in areas of specific risk
we have identified, with a focus on ensuring good governance and value for members, as well as
publishing reports to demonstrate how we have intervened. In addition, we will continue to lead
on ‘Project Bloom’ with our strategic partners, which raises awareness of pension scams through
our communications campaigns and taking action in the criminal courts against scammers.
Corporate Plan 2018-2021 11Our priorities
Promoting good trusteeship through improving governance
2 and administration
Improving standards of governance, record-keeping and data in schemes
We want to see improved standards of governance across the whole pensions landscape – no matter
what type or size – and this drives our ongoing 21st century trusteeship campaign that we will continue
in 2018. If schemes fail to meet the basic duties, we will take action. Where schemes are unable to
meet the standards of governance we expect, we will encourage them to explore consolidation into an
alternative arrangement that provides good value for their members.
Trustees have a significant responsibility in protecting the benefits of their members. We are
looking for trustees, especially chairs and professional trustees to have the right knowledge and
understanding. We expect a balanced and diverse board that can challenge and understand advice, as
well as having clear decision-making processes.
As part of this work, we plan to start reviewing and consolidating our existing guidance to make
our expectations clearer. We will be focusing on the administration and data standards across all
schemes (DB, DC and PS schemes). We will also be working with the government and industry on the
implementation of the pensions dashboard, and driving good record-keeping standards in schemes.
3 Effective regulation of DB schemes
Overseeing and intervening where necessary, to maintain the right level of funding and
sponsor support of DB schemes so they can pay benefits as they fall due
We are committed to regulating as effectively as possible, so that members of DB schemes
receive the benefits they are entitled to at retirement. We will focus particularly on the schemes
that present the biggest risks and take action where funding is not appropriate for that scheme or
against those who are seeking to avoid their liabilities.
We will continue to assess the DB landscape to highlight trends and respond to issues by setting
out clear expectations of schemes through our DB landscape and Annual Funding Statement
publications. We will seek to maximise good outcomes for all DB scheme members and
demonstrate clear measures in achieving that aim.
As part of developing a broader reach and a more segmented risk-based approach, we will
be focusing further on smaller DB schemes. Alongside this work, we will continue to engage
proactively with larger schemes, making sure we are clear about our expectations of trustees in
their specific circumstances. If we see a situation where we believe a scheme is not being treated
fairly relative to other creditors, we are likely to intervene and if necessary use our formal powers.
We will continue to work closely with the DWP in implementing the recommendations of the DB White
Paper, making revisions to our DB funding code, regulatory policy and practices where necessary.
Corporate Plan 2018-2021 12Our priorities
4 Effective regulation of master trusts
Deliver the new authorisation and supervision regime
We will be open to applications from master trusts for authorisation from October 2018.
The master trust regulations will be laid before Parliament this year, and our draft code of practice and
supporting guidance will be finalised to support master trusts in meeting our expectations of them.
In delivering the new authorisation and supervision regime, we will continue to engage with the
UK’s master trusts before they apply for authorisation. We will clearly set out the standards they will
need to meet, and we will work closely with those who intend to exit the market, to encourage a
smooth transition process.
Ensuring employers meet their ongoing automatic
5 enrolment duties
A focus on new employers’ compliance, contribution increases, and the re-enrolment and
ongoing duties of employers
With all existing employers having passed their staging dates and workplace saving in pensions
becoming the norm for UK employees, we will be ensuring that employers continue to meet their
ongoing legal duties. New employers also have a requirement to fulfill their AE duties.
In line with our expectations for all employers, we will continue to focus on ensuring pension
contributions are paid to schemes on time and that they are in keeping with the contribution rate
changes as they come into effect.
We will be taking forward the findings and recommendations of the 2017 AE review, and we will
also continue to work with other government departments to strengthen our data sharing and
intelligence.
Corporate Plan 2018-2021 13Our priorities
6 Preparing for the impact of Brexit
Building understanding and resilience, with an appropriate regulatory response to the
Brexit outcome
We will continue to work closely with the government and wider pensions industry to build our
understanding and response to the potential effects of Brexit on schemes.
This work will include responding to any changes to European pensions law and requirements into
UK law, and assessing the implications for cross-border schemes.
As further analysis of the effects of Brexit on UK pension schemes becomes available, we will
provide specific guidance to schemes and the industry where appropriate.
7 Equipping our people to meet the challenges we face
Being flexible within a changing landscape and remit
We want our people to reach their full potential, and we will continue to strive towards this through
effective performance management and development opportunities for staff at every level of the
organisation.
We need to remain flexible in the face of the challenges to meet our objectives. To do this, we will
be evaluating our job roles and our approach to reward so that it encourages high performance.
We will build our culture to be more adaptable and flexible, which will help us respond quickly to
the challenges.
We have high staff engagement levels and will continue to support staff through a dynamic
and supportive workplace, providing training and development programmes and by attracting,
developing and retaining staff with the right skills to meet the needs of our organisation.
In addition, we are developing the data, processes and systems we use so that as an organisation
we can be more targeted and efficient and enable our staff to be increasingly effective.
We are proud to promote the development of equality and diversity of our workforce and will
be developing this further. As our organisation develops, we will support our staff by effectively
managing change, and maintaining our focus on staff wellbeing and mental health through our
Time to Change pledge and Disability Confident award levels.
Corporate Plan 2018-2021 14Our priorities
8 Delivering The Pensions Regulator of the future
Developing an approach to regulation that focuses on more proactive and targeted work
and uses a wider range of regulatory interventions
Having worked closely with our wide range of stakeholders, who have added to our understanding
of the changing regulatory landscape over the last year, we continue to design and roll out a new
operating model for regulation – known as ‘TPR Future’.
We will be improving and expanding our oversight of those we regulate so we can identify risk
earlier and more effectively. We will also be making more use of standards-based regulation,
building on our compliance insight and tailoring our approaches to different sectors of the market
to drive the best outcomes with the resources we have.
We are working with our regulatory partners, stakeholders and advisers to deliver a comprehensive
and consistent framework of regulation, communication and tools for trustees, employers and
members. We are also working with the FCA to develop our pensions strategies as part of our
ongoing collaboration with them and other partners to protect members’ benefits.
We will give more detail of our changing regulatory approaches over the summer, clarifying the
implications for those we regulate. We will then be implementing these changes over the course of
this Corporate Plan.
In addition to these specific priorities, there are many regulatory and support functions that
we continue to perform. Some of these are required by law, others are ongoing activities
needed to operate effectively and execute our functions. Our structure will ensure we have
the right people in the right place for the effective governance of our organisation and the
delivery of our statutory objectives.
Corporate Plan 2018-2021 15Evaluation
We measure our impact and performance in a number of ways. Key
Performance Indicators (KPIs) are used to demonstrate progress against our
corporate priorities. We have also defined four Outcomes to demonstrate
achievement against our statutory objectives, reflecting that we must
work with other stakeholders in addressing the risks in the wider pensions
landscape.
The revised Outcomes set out below are reflected in the formation of this
Corporate Plan. We are now revising our Key Outcome Indicators (KOIs),
through which we will track progress.
We provide a review of our performance, including key indicators and
achievements, at the end of each financial year in our annual report and
accounts.
Our revised Outcomes
Our work as a regulator takes place in the context of broader public policy
objectives for pensions, such as ensuring individuals save enough to have a
decent income in retirement.
This Corporate Plan has been developed in alignment with the following
proposed outcomes which are closely aligned to our statutory objectives:
1. Assured participation in workplace pensions savings
Workers are automatically enrolled and contributions are paid.
2. Protected members and PPF
Members receive their entitlements from a well-run scheme.
3. Capable regulated entities held to account
Entities understand what they must do, are able to do it and know the
consequences of not doing so.
4. Confidence in the security and quality of workplace pension savings
Members can reasonably expect their savings to be in safe hands.
We will define KOIs during this financial year and provide trend analysis
in future annual reports. We will say more about our refreshed regulatory
outcomes and the associated measures when we publish more about our
new approach to regulation over the summer.
Corporate Plan 2018-2021 16Evaluation
Key Performance Indicators
Our KPIs continue to evolve to reflect the changing landscape, our new regulatory duties,
emerging risks and our corporate priorities.
Our KPIs represent targeted measures of our internal performance. These are largely within
our control and are as key to evaluating our performance against our statutory objectives for
consistency. We have based our suite of KPIs for this Corporate Plan on last year’s measures, while
adding to them where appropriate to demonstrate performance against new areas, such as master
trust authorisation.
We will continue to develop our methods of measurement so they remain relevant, as objective as
possible, and are the clearest indicators of our performance.
Our KPIs link to our eight corporate priorities:
1. Enhancing and executing effective regulatory approaches across all schemes
2. Promoting good trusteeship through improving governance and administration
3. Effective regulation of DB schemes
4. Effective regulation of master trusts
5. Ensuring employers meet their ongoing automatic enrolment duties
6. Preparing for the impact of Brexit
7. Equipping our people to meet the challenges we face
8. Delivering The Pensions Regulator of the future
Table: Our KPIs
Area and
2018-19
relevant Key Performance Indicators
Target
priorities
Defined 1.1 The proportion of draft applications received that will 100%
contribution receive feedback on the information submitted within the
1, 2, 4 master trust readiness review application window.
1.2 The proportion of master trust authorisation applications 90%
that will be referred to the Determinations Panel within 20
weeks of a full and complete application having been received.
1.3 Establish which master trusts intend to exit the market and 100%
engage with all of them so they ensure their exit takes place in
a controlled way.
Corporate Plan 2018-2021 17Evaluation
Area and
2018-19
relevant Key Performance Indicators
Target
priorities
Public service 2.1 We will proactively engage with the highest risk cohort 100%
1, 2 of schemes to improve standards of governance and
administration.
2.2 We will subject a proportion of the high risk cohort to high 10%
intensity regulatory oversight2 in the first year of adopting this
new regulatory approach.
2.3 For the cohort of schemes where we have intervened, we 90%
have either concluded that no further action needs to be taken
or opened a formal investigation with a view to using our powers
within 12 months.
Governance 3.1 Trustees and employers are provided with our clear Key
and expectations of them, through: activities
administration achieved
1, 2 our ongoing campaign work
publication of the outcome of our thematic reviews
revised guidance and new guidance on bulk transfers
publication of our new master trust code of practice and
initial guidance
3.2 A high proportion of members are in schemes that have 97%
completed a scheme funding valuation or are compliant with
the requirements to notify us of the breach.
3.3 Where recovery plans are not received in line with 95%
requirements, we have concluded that no further action is
required or opened a formal investigation with a view to using
our powers within 12 months.
3.4 A high proportion of scheme members will be in schemes 99.5%
that have provided their scheme returns to us in line with the
requirements.
3.5 The number of Trustee toolkit module passes. >14,000
Corporate Plan 2018-2021 18Evaluation
Area and
2018-19
relevant Key Performance Indicators
Target
priorities
Defined 4.1 The proportion of assessed DB scheme risk3 we have 70%
benefit engaged with during the last three years.
1, 2, 3
4.2 Percentage of scheme funding valuations where we opened 80%
an investigation and, within nine months of the valuation
submission date, we have either determined that no further
action is required, or we have formalised our view on the use of
our powers.
4.3 We will maintain the significantly increased level of proactive Increased
casework ahead of formal valuation that we achieved in 2017-18. level
maintained
4.4 In DB enforcement cases, we will achieve the same number Increased
of the following outcomes during 2018-19 as we did in 2017-18; level
warning notices, judgments at the Determinations Panel, Upper maintained
Tribunal or other court and settlement.
Automatic 5.1 A high proportion of the employer population has a 90%
enrolment qualifying scheme ultimately in place.
1, 5
5.2 A high proportion of the jobholder population has been 94%
ultimately put in a qualifying scheme.
5.3 A high proportion of employers make contributions to their 94%
respective scheme before they become materially late.
Corporate 6.1 Our employee engagement score as per our independent 75%
7, 1, 8 survey.
6.2 Proportion of roles filled within three months. 70%
6.3 Staff agree that their performance has improved as a result 70%
of skills, knowledge or behaviours developed over the last year.
6.4 The TPR Future programme will deliver its milestones: Key
1. Regulatory strategy defined and function established. milestones
2. Horizon scanning cycle complete. delivered
3. Implemented new approach to setting regulatory
expectations, including guidance and relationship
management.
4. Regulatory oversight and enforcement functions established
and associated tools implemented.
Corporate Plan 2018-2021 19Our structure
To work as efficiently as possible, we need an agile and responsive workforce. To maximise our
impact, we expect our resources to be divided across the organisation in 2018-19 as follows:
Resource distribution by directorate for 2018-19
Based on total headcount split by directorate
34% Frontline regulation
End-to-end regulatory
process. All non-AE cases
20% Regulatory policy and enquiries, customer
Policy, research, support and intelligence
risk, data, actuarial,
investment, legal and
business analyst teams
1% Data team
19% Finance and
operations
IT and change,
financial management,
procurement and
facilities management,
16% Automatic Corporate Governance
enrolment4 including Board and
AE cases and Determinations
enquiries, industry Panel support
liaison and design and
delivery of employer
compliance duties
3% HR 1% Corporate 6% Communications
The CEO office and
Regulatory Assurance
Corporate Plan 2018-2021 20Financial summary
Funding
Our funding is derived from two main sources: a grant-in-aid from the DWP which is recoverable
from a scheme levy relating to Pensions Act 2004 duties, and a separate grant-in-aid from general
taxation relating to the AE programme arising from Pensions Act 2008 duties.
Since the last Spending Review settlement in 2015, we agreed obtained agreement from DWP for
additional spending for 2017-18, as outlined in the 2017-18 Corporate Plan. This was to address
key challenges including implementing the new master trust regime and increasing our frontline
resources to undertake higher volumes of casework more quickly and proactively.
We made good progress last year in addressing those challenges and we now plan to enhance
our approach and further increase our reach as part of the TPR Future programme - our new
approach to regulation. We have therefore agreed with DWP additional levy expenditure of £9.8
million in 2018-19, and £12.2 million in 2019-20, compared to the amounts set out in last year’s
Corporate Plan.
We have also agreed additional spend for our AE activities, to develop how we will regulate AE in
future years. We have agreed with DWP an additional £1.2 million (2018-19) and £3.1 million (2019-
20) compared to last year’s plan.
2017-18 financial results
The table in the next section compares the 2017-18 full year spend to the budget. The categories
shown illustrate the major areas of expenditure. The forecast spend in 2017-18 of £84.3 million
is £0.2 million above the original budget agreed with the DWP of £84.1 million. However, the
overspend was pre-agreed during the year. The main reasons for the permitted overspend were:
higher costs incurred in our enforcement cases (£2.7 million)
higher use of professional services (£0.3 million)
Offset by:
not calling upon certain AE reserves set aside (£1.7 million)
lower spend on our change projects (£1.1 million)
Corporate Plan 2018-2021 21Financial summary
2018-19 budget
The budget for 2018-19 shows an increase of £4.3 million against the full year spend in 2017-18.
The main reasons for the increase are:
Increase in salary costs (£5.9 million) reflecting the growth in headcount in both 2017-18 and in
2018-19, largely reflecting increased levels of regulatory activity.
Increase in non-payroll, other staff related costs and professional services spend (£1.8 million)
mainly to support project activity.
Additional communications spend (£1.0 million) due to forthcoming scams campaign.
Increase in related accommodation and other general office costs (£0.5 million).
Offset by:
Reduction in contractual costs (£4.3 million) mainly due to the completion of AE roll-out to the
large number of small and micro employers.
Reduced call on consultancy services (£0.6 million) supporting project activity.
Corporate Plan 2018-2021 22Financial summary
Table: High level cost summary
2017-18 2017-18 2018-19
Category actual5 budget budget
(£000) (£000) (£000)
Income (22) (16) (16)
Salaries 41,843 42,068 47,697
Non-payroll staff costs 1,983 1,386 2,229
Other staff costs 2,413 2,347 3,006
Consultancy 2,711 737 2,130
Professional services 6,527 6,114 7,513
Communications 770 1,056 1,745
Managed contracts 21,735 23,805 17,441
Accommodation/general office costs 4,015 4,181 4,560
Telephony/internet 248 360 302
Fixed asset costs 806 700 700
Depreciation 1,287 1,343 1,354
Total 84,316 84,081 88,661
Corporate Plan 2018-2021 23Financial summary
A comparative analysis of the full year actual spend for 2017-18 compared to the budget over
the future three years, split by our levy and AE funded activities, is shown in the table below.
We continue to revisit and update the future spend profile each year to reflect the latest known
information and plans.
The levy costs increase over the period to reflect the growth of staffing to respond to our growing
regulatory remit and approaches, and our technology and data investment plans for the next three
years. The AE costs fluctuate over the next three years, reflecting the cyclical nature of employers’
AE duties, particularly re-enrolment dates, but with an increase in expenditure in 2019-20 as we
commence a programme of work to prepare for the future AE strategy and operating model. This
is required as a result of our key outsourcing contract ending during 2021.
Table: Four year cost summary
2017-18 (£000) 2018-19 (£000) 2019-20 (£000) 2020-21 (£000)
Levy 44,116 52,396 53,546 54,512
AE 40,200 36,265 42,018 36,651
Total 84,316 88,661 95,564 91,163
Staff numbers
The table below shows the 2017-18 actual FTE staff numbers, and the projected average up to
2020-21. The increase in 2018-19 and 2019-20 in levy reflects the additional staff required to fulfil our
broadened responsibilities and to implement our new regulatory approaches. Staffing levels in AE
remain broadly similar with slight reduction in the longer term as efficiencies are achieved due to
better use of data.
Table: Average FTE analysis
2017-18 2018-19 2019-20 2020-21
Levy 371 442 501 521
AE 220 218 215 199
Total 591 660 716 720
Corporate Plan 2018-2021 24End notes
1.
All financial amounts relate to Occupational DC schemes with 12 or more members (so exclude
micro DC and Hybrid DC). See www.tpr.gov.uk/dc-trust for more detail.
2.
High intensity regulatory oversight in this case relates to one-to-one relationship management with
a subset of schemes.
3.
DB scheme risk is measured as the funding and investment risk that may not be supportable
by the covenant; namely a combination of the level of underfunding in the scheme taking into
account the strength of the employer covenant and scheme maturity compared to the current cash
contributions being paid; and the additional deficit that could arise from the investment strategy in
the future, which may not be supportable by the covenant.
4.
A core element of our AE delivery is through our outsourced partner (full time equivalents (FTE)
not included).
5.
Subject to final audit.
Corporate Plan 2018-2021 25How to contact us Napier House Trafalgar Place Brighton BN1 4DW www.tpr.gov.uk Corporate Plan 2018-2021 © The Pensions Regulator May 2018 You can reproduce the text in this publication as long as you quote The Pensions Regulator’s name and title of the publication. Please contact us if you have any questions about this publication. This document aims to be fully compliant with WCAG 2.0 accessibility standards and we can produce it in Braille, large print or in audio format. We can also produce it in other languages.
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