Supporting UK growth: TPR sets out its agenda

In a letter to the Government and an associated speech, The Pensions Regulator has announced measures intended to support economic growth.

TPR will take steps to drive or facilitate investment in productive assets. By investing productively, TPR argues, trustees can benefit the UK economy and improve member outcomes as well; "the two do not have to be in conflict".

TPR also plans to streamline processes, promote innovation and reduce the regulatory burden.

Background

The Government wrote to key regulators in December 2024, asking each to propose reforms which could be implemented in 2025 to support economic growth. On 17 March 2025 the Government published a policy paper which explained its ambitions, and listed pledges made by regulators including TPR.

Building on the relevant pledges, TPR's letter sets out a series of commitments under the following headings:

• increasing the value of pension funds;
• enabling productive investment;
• reducing unnecessary regulatory burden and releasing funds for investment;
• driving growth through data and digital enablement; and
• supporting market innovation.

What's new

New and notable points include the following:

1. Investment

• TPR will liaise with schemes and with the Government to clarify the types of alternative investment which best meet trustees' objectives.
• TPR acknowledges that there may be perceived difficulties in reconciling productive investment with trustees' fiduciary duties. TPR offers to facilitate a conversation on the issue between the pensions industry and the Government.
• TPR will develop a strategy this year to raise standards of trusteeship, so that all trustees are capable of considering a diversified range of investments. At the same time, TPR will extend its supervisory grip over professional trustee firms and others who have an influence on outcomes.

2. Value-for-money

• From TPR's speech, it seems that the terms of the proposed new VFM framework are being reconsidered, with the regulators seeking a "middle ground" – neither too binary nor too flexible.
• In the meantime, TPR will this year design the process for analysis of investment performance data under the new framework.
• TPR will encourage master trusts and large own-trust schemes to share performance and asset allocation data voluntarily from this year onwards.

3. DC consolidation

• TPR will continue to support the consolidation of poorly-performing schemes, in order to ensure value-for-money. TPR observes, that, based on its modelling, some master trusts will soon be supersized, but there is no mention of the Government's "minimum size" proposals.

4. DB surpluses

• TPR will conduct a review and provide a report to the Government, to help formulate a policy decision on the use of DB surpluses. (An announcement in January 2025 indicated that the Government intends to facilitate access to surpluses. Judging by TPR's comments, it may be some time yet before proposals are finalised.)

5. Efficiencies and innovation

• TPR will reduce the burden on schemes by reviewing and streamlining its data requirements.
• TPR will work with the industry and the Government to make better use of data and build digital skills, in order to foster innovation and competition.
• TPR will create an innovation framework and hub, to develop and test new services.

6. Deregulation

• This year TPR will review its capital reserving requirements for master trusts, on the basis that the requirements may be unduly cautious. As things stand, master trusts together hold £350-400m of reserves. 15% of reserves must be held in cash, meaning they cannot be invested productively.
• Over the next 12 months, TPR will review both regulatory interventions and legislation, to determine whether they are of genuine value. TPR will ask the Government to repeal any legislation which is found to be unnecessary. A candidate already identified is the mandatory penalty under the chair's statement regime – the penalty is "no longer required".
• TPR suggests that the Government should give it rule-making powers, so that legal requirements can be flexed to reduce unnecessary burdens, or to reflect developing technologies.