Lesley Titcomb, the Pensions Regulator’s new chief executive has taken the helm at the busiest of times. She outlines her priorities and considers the challenges that lie ahead
Lesley Titcomb isn’t afraid of a challenge.
The new chief executive of the Pensions Regulator has been in post for three months and has a formidable to do list ahead of her.
She seems calm and undaunted when I meet her, and says she has been busy seeing “key stakeholders” across the industry. From our conversation it is clear that she has been well briefed by those stakeholders, but that she is still looking for new ideas and input.
We meet on 1 June, the day when companies with under 30 employees start to auto-enrol their staff.
Making sure that 1.3 million smaller and micro employers get through the auto-enrolment process successfully is “The number one thing at the top of our list,” says Titcomb.
What are her first impressions of the pensions industry? “The first thing that strikes me is the volume of publications and journals there are! I’ve been absolutely astonished by that! That’s the first thing,” she laughs. “Everyone has been incredibly welcoming. Lots of different views [have been] expressed and sometimes those views are contradictory, which is always interesting.”
Despite a recent backlash against the cost of paying for nannies and cleaners to have pensions, Titcomb is optimistic that even small employers will want to do “the right thing. They just need some help in getting over the line.” Rather than seeing the coverage as negative per se, she sees it as an opportunity to raise awareness about the importance of planning ahead.
Coming in with a big heavy hand isn’t the way to do it”
But she acknowledges that small employers will need some help. “Coming in with a big heavy hand and turning to enforcement powers straight away isn’t the way to do it, we have to engage with these people and educate them,” she says.
Engagement is a challenge because although the Regulator receives data from HMRC about small employers, there is no information about what type of employer they are.
“It could be a butcher, it could be a baker, or it could be a website maker!” laughs Titcomb. “Or it could be someone who employs a nanny or a carer. We don’t know that initially. So we have to think about how to get into all of these sectors and different populations to get the message across.”
It could be a butcher, it could be a baker, or it could be a website maker!”
The media is one channel, she says, whether via advertising campaigns, national media debate or through targeted campaigns in specialist media. The Regulator also plans to launch a Facebook page to reach another demographic.
In with the new
Pension schemes and the industry alike have had to adapt to the pension flexibilities very fast. We may see limited new at-retirement options on offer to members at first, with greater sophistication coming further down the line. Are members retiring today at risk of missing out on some exciting options further down the line; say in five years’ time?
“That’s an interesting question,” Titcomb says, musing for a moment before replying. “First of all, we are monitoring very carefully what’s going on. We’re going to be asking for more information about the levels of transfers out, looking at DB schemes and how many people are asking to transfer into DC – collecting information that we haven’t hitherto collected in order to work out what’s going on.
We’re going to be asking for more information about the levels of transfers out”
“I do think that a lot of what came in for April 6th was introduced quite quickly. We certainly feel that there’s a lot of consequential tidying up that needs doing on our own guidance and so on. So we’ll be revising our DC Code during the coming year.”
Looking at the figures that have been released thus far on what schemes are offering, there seems to be a good selection of options out there, Titcomb says. She also points out that members of pension schemes can wait and see what else comes to market. “It’s not a one-off decision that you have to make now. So I don’t think the five year thing will be too much of a problem in that regard.”
Small can still be beautiful
Last year, Andrew Warwick-Thompson was worried about the proliferation of mastertrusts. The Pensions Regulator’s executive director for defined contribution told Pensions Insight: “In principle, mastertrusts are a super idea. We want big-scale schemes. That’s why we don’t want a proliferation of them… If you fragment the market down to as many as 70, which is possible, then I think we’ll have defeated the object of the exercise.”
What we want to see are well-governed schemes”
In a regulatory step change, Titcomb professes not to be overly concerned about small mastertrusts, as long as they are well run. “What we want to see are well-governed schemes. We are most concerned about the quality of schemes,” she explains.
“There is some evidence that shows it’s easier for the larger mastertrusts to be well-governed because there are the additional governance requirements that have just been introduced for them, and it’s easier for them to secure better value for money for their members, if nothing else, through economies of scale. But does that mean that automatically big is good and small is bad? Absolutely not. It’s equally possible for a small mastertrust to be well-run,” she says.
There is some evidence that shows it’s easier for the larger mastertrusts to be well-governed”
She expands: “You automatically do get the economies of scale [within large mastertrusts] but a value for money scheme isn’t just about cost or about particular costs. It’s about costs throughout the lifetime, the quality of service and stewardship that is applied to the members’ assets. Larger schemes perhaps do have a bit of an inbuilt advantage but that’s not to say that small ones can’t survive and do well.
“Whether market forces drive consolidation will be interesting to see,” she concludes, before urging small and large mastertrusts alike to become members of the ICAEW’s mastertrust assurance framework.
Governance of mastertrusts and independent governance committees alike is a challenge - and we have seen a small number of trustees receiving a significant share of the appointments. Is Titcomb concerned about groupthink?
I think we always have to challenge ourselves”
She pauses. “I think we always have to challenge ourselves, don’t we? All of us who are decision-makers in any capacity, about making sure that we don’t get groupthink. It’s a good question, a good challenge. It’s at very early stages. We need to keep an eye on it. It’s an interesting observation, I shall reflect on it.”
With that, she is off to work from her London home - “I have a lot of phone calls to make.” I get the impression that this is one regulator who won’t stop learning any time soon.