Due to the convergence of the trust-based and contract-based defined contribution pension schemes, Standard Life is calling for one regulator to oversee all of the pension provisions. In response to the completion of the Thornton review, Standard Life claims that there is a strong case to merge The Pensions Regulator, Financial Services Authority and the Pensions Protection Fund.
Standard Life argues that most of the differences between trust-based and contract-based defined contribution schemes have been wiped out in the recent changes to the rules. However, both schemes invest in the same, or similar schemes; they must both provide the member with the option of an annuity on the open market and have similar charges for schemes. However, although they appear identical to the member, there are very different regulations in place for contract-based and trust schemes.
Our view
We agree with Standard Life. With the introduction of personal accounts, by the year 2012, we could have three very similar pension schemes, which are regulated by or report in very different ways to five different bodies – The Pensions Regulator, The Financial Services Authority, Pensions Protection Fund, Department for Work and Pensions and The Treasury. ‘Jobs for the boys’ and then ‘back home to Blighty for my peerage’. The pension industry needs to stop wasting money and get on with the business of getting people to save for their retirement.