Pension schemes fined £33,000 for failing value test

Pension schemes have been fined more than £33,000 by The Pensions Regulator (TPR) after failing a detailed value for members (dVFM) assessment. TPR’s compliance and enforcement bulletin published today showed schemes in breach of dVFM have been fined £33,750. The initiative was launched last year by TPR to check that savers in DC schemes are benefitting from rules requiring trustees to assess whether they deliver value through a dVFM. So far, around 17% of DC schemes TPR engaged with as part of its drive have opted to wind up, after having it reported that their schemes do not offer good value. As dVFM regulations apply to around 1,323 DC schemes, if the results are reflected across the whole DC landscape, the regulator said it reckoned that more than 200 schemes would be opting to wind up. Mel Charles, interim executive director of regulatory compliance at TPR, said: “These penalties show our determination to ensure DC schemes deliver value for savers. Those that can’t meet our expectations should consider whether a transfer to a better-value scheme and winding up is in members’ best interests. “Trustees can expect to see more penalties issued as we analyse data from scheme returns.” TPR used its powers 10 times in relation to dVFM assessments between January and June. It issued seven penalties, totalling £19,250, and three improvement notices. Combined with penalties issued between November 2023 and January, when TPR carried out a pilot exercise, total penalties for dVFM breaches have reached £33,750. More schemes are expected to be named as further penalties are issued or paid. Trustees of schemes failing to deliver value must have a plan to improve or transfer members to a better-value scheme. TPR’s C&E bulletin also shows it fined two pension schemes for failures relating to annual climate change reports.GKN Group Pension Scheme and The Prudential Staff Pension Scheme were fined £8,000 and £5,000 respectively. Mr Charles said: “The vast majority of schemes are complying with their climate reporting requirements, but we will continue to enforce where we identify failures. We are also increasing our focus on investment governance and trustees should expect to be challenged on whether their climate reporting disclosures are the product of strategic decision making aimed at protecting savers from the financial risks of climate change, both now and in the future.” Schemes in scope of the regulations, developed from the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations, must publish their report by a set deadline on a publicly available website so savers can be assured trustees are making decisions which take into account climate risks and opportunities.

Pension schemes fined £33,000 for failing value test

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