Running a pension scheme

Regulation of workplace pension schemes

Guide

The Pensions Regulator and the Financial Conduct Authority (FCA) regulate workplace contract-based pension schemes, eg personal pensions or stakeholder policies where the employer is responsible for making contributions or deductions from employees' pay.

The role of the Pensions Regulator

The Pensions Regulator aims to protect the benefits of all those who have work-based pension schemes, to reduce the risk of problems arising that might cause a call on the Pension Protection Fund, and to promote good administration.

The Pensions Regulator:

  • provides information to trustees, administrators, employers and others to help them meet their responsibilities
  • promotes good administration and governance
  • regulates the requirements which apply to payment of contributions by employers
  • registers employers' compliance with automatic enrolment requirements and regulates compliance with the requirements

The role of the FCA

The FCA regulates the sale and marketing of all stakeholder pension schemes and all personal pension schemes, including group personal pensions and self-invested schemes (SIPPs). The FCA authorises firms that provide and operate schemes and also regulates firms that give advice to consumers about these schemes.

Although the Pensions Regulator regulates occupational pension schemes, the FCA regulates firms which provide investments and investment services to these schemes, such as investment managers who sell pension products. Find out about the FCa's aproach to regulating pensions and retirement income.

How pension schemes are regulated

New employer-sponsored pension schemes must be registered with HM Revenue & Customs (HMRC) and the Pension Regulator's Register of Pension Schemes.

All administrators - except for the smallest schemes - must then submit an annual scheme return to the regulator that covers:

  • basic details of the scheme
  • registration and approval
  • type and status
  • breakdown of active, deferred and pensioner members
  • trustees, advisers and providers
  • participating employers
  • current financial information

The Pensions Regulator has powers to investigate any discrepancies that show up in these returns.

A qualified auditor must verify the existence and value of scheme assets, and in the case of defined benefit schemes, an actuary should determine whether the fund's future liabilities can be met from current assets. Auditors and actuaries are both required by law to alert the Regulator to potential problems with the schemes that they advise. Trustees, the employer, the administrators or the professional advisers of any schemes in trouble are also expected to blow the whistle if misconduct is expected or uncovered.

The Pensions Regulator has a range of powers to collect data, information, contributions and fees. Find out about the Pensions Regulator's approach to regulating workplace pensions.