TPR ‘Evolving’ to Shift Focus to Defined Contribution Master Trusts

The Pensions Regulator, the U.K.’s pension watchdog, announced it is “evolving” to focus its supervision on defined contribution master trusts, particularly regarding their “investments, data quality and standards, and innovation at retirement.”

A defined contribution master trust is a multiple-employer workplace pension plan in the U.K.

“In pensions, a radical evolution is taking place, shifting the make-up of the market towards fewer, larger schemes,” said TPR Chief Executive Nausicaa Delfas in a speech at the regulator’s Master Trust Conference on July 8. “In less than six years, over three-quarters of trust-based DC members could be in schemes of over 50 billion pounds” ($65 billion).

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Delfas told the conference that the regulator will not tell master trusts how or where to invest, “but we will be challenging you to make sure you have the skills and experience to consider a range of diverse assets if they have the potential to deliver value for the saver over a long-time horizon.”

She also said TPR will make sure that master trusts’ consideration of environmental, social and governance issues “is not just tick-box compliance, but the genuine product of strategic decisionmaking with the long-term interests of savers at its heart.”

As part of the regulator’s change in focus, it has appointed Neil Bull as its executive director for market oversight to head a new division at TPR. Bull, who joined TPR in 2017, leads the TPR investment team, which advises defined benefit and defined contribution plans on investment. He previously was an investment consultant and fixed-income portfolio manager at IBM Retirement Funds EMEA.

“As many master trusts start their evolution towards becoming systemically important entities and reflecting the volume of savers now within DC, we are rebalancing our focus,” Bull said in a speech at the conference. “If the challenge of the last decade was getting people saving into high-quality pension schemes. The challenge of the next is to ensure value.”

Bull said that master trusts should expect TPR to look more broadly at their investment governance practices and investment decisionmaking.

“For example,” he said, TPR will be “seeking to understand if climate reporting disclosures are really the product of your strategic decisionmaking and protecting savers now and in the future or something you view as a burden that just needs to be complied with.”