Referee or Player: what is the role of the Pensions Regulator?

30 January 2006

Clarifying the precise role of the Pensions Regulator when regulating the funding of defined benefits is crucial for business, the Institute of Directors (IoD) said today. The ground rules for the Regulator's use of powers have to be understood by employers, employees and trustees for proposed reforms to work.

Miles Templeman, Director General of the IoD, said:

”A great deal will depend on how the Pensions Regulator works in practice. In particular, how will the Regulator be positioned along the scale from a pure referee to an active player alongside the employer and the pension scheme trustees? Unlike a football game, there will be no sharp boundary between these roles.

“If acting as a referee, the Regulator would presumably, review the evidence and decide whether or not the trustees and the employer would be likely to see the scheme out of difficulties on their own. As a player, the Regulator could take too much control. We would like to see the role fall somewhere between the two - sitting down with the parties, exploring ways forward for the scheme and helping the parties to reach agreement.”

The IoD made the call in its response to the consultation document issued by the Pensions Regulator in October 2005 on how it should regulate new funding requirements for defined benefit schemes.

Miles Templeman added:

“In order to be effective in a role of referee plus minimal player, the Regulator would need the attitude of a businessman, seeking to ensure that a good deal was done and not afraid to encourage a deal to which some risk was attached, even though the Regulator might be seen as partly responsible for the deal because of actions that were those of a player rather than a referee.”