A favoured technique of pension scams is cold-calling, claiming to be from a government-backed body and offering to review the potential victim’s financial arrangements for retirement.
But one would-be scammer got more than they bargained for when the person at the other end of the line was better-informed than most – Lesley Titcomb, chief executive of The Pensions Regulator (TPR).
She explains that she was called up one day, while on the train, and offered such a review. As the conversation unfolded, “the carriage was rather entertained, as you can imagine”.
Driving awareness to help prevent people being unscrupulously parted from their pension pots is a priority for Brighton-based TPR, which Titcomb has headed for just over a year. Speaking during a visit to Edinburgh, she notes that her background is in financial services regulation, having previously held the role of chief operating officer at the Financial Conduct Authority (FCA), in charge of its operational platform and a member of its board. She has spearheaded work to deliver the transition to the FCA from the Financial Services Authority and supervised efforts to bring the regulation of consumer credit from the Office of Fair Trading to the FCA.
In 1994, Titcomb joined the FCA’s predecessor-but-one, the Securities and Investments Board, after qualifying as a chartered accountant with Ernst & Young.
She describes her current role as “fascinating” but somewhat busy over the last year, with the regulator recently announcing that it agreed a settlement worth up to £363 million with disgraced retail tycoon Sir Philip Green to plug the pension gap of collapsed department store chain BHS.
TPR said the move closes to its enforcement action against Green, bringing clarity to the 19,000 members of the retailer’s existing pension schemes.
The agreement also provides funding for a new independent pension scheme giving pensioners the option of the same starting pension as they were originally promised by BHS, and greater benefits than they would get from the Pension Protection Fund (PPF).
Titcomb says: “We believe it’s a very strong outcome for the members of the BHS schemes both current and future. We think it’s very important to have demonstrated that we’re prepared to stick to our guns as a regulator.”
And she believes it isn’t just a question of the amount of money agreed, in this case a record for TPR. “It’s about how the arrangement is structured – this is about setting up a new scheme, effectively.”
Looking at the circumstances leading to the settlement, Titcomb says that when BHS was sold by Green for £1 to Dominic Chappell’s Retail Acquisitions in March 2015, “we launched an investigation immediately, because in our view the consideration of the pension scheme position had not been take into account”.
BHS went into administration in April last year, and in November TPR issued a warning notice, with the negotiations picking up speed after Christmas. “We’re very pleased that Sir Philip was able to address some of the concerns that we had,” says Titcomb.
However, commenting on the settlement at the time of the announcement, Hargreaves Lansdown senior pension analyst Nathan Long said it was “not without its challenges”, such as contacting former employees so they can transfer to the new scheme.
“Whilst this is a positive outcome for BHS Pension members who were otherwise headed into the PPF, there remain unanswered questions about the role of TPR when it comes to mergers and acquisitions,” he said.
Titcomb points out that the BHS case boosted awareness of TPR’s activity, and made people think about what kind of pension arrangements they have in place amid what she admits is a challenging task to boost engagement.
And BHS has been a major undertaking for TPR. “It’s taken up a great deal of resource and senior management time over the past year or so,” Titcomb says. “It’s a very important case for us and it’s very important that we learn lessons from it.”
But she also stresses that TPR’s other responsibilities continue even when some cases hog the limelight. Heading an organisation with an £80 million budget and team of about 550, she says it’s her duty to ensure it can “push forward on all the necessary fronts, not just get subsumed into dealing with one particular issue at a point in time”.
One key part of TPR’s remit is automatic enrolment, whereby every employer in the UK must put certain staff into a pension scheme and contribute towards it.
It’s a mammoth task, but TPR revealed in December that more than seven million people across the UK now signed up, while by the end of this year more than a million employers will have complied with the law.
Titcomb says: “In Scotland over 450,000 people have now been enrolled and about 34,000 employers have signalled their compliance and done the right thing, which is fantastic.”
She says most employers are on board with the requirement, inevitably leaving a handful who need encouragement and a “very small number” that are wilfully non-compliant.
“But to be frank, the vast majority do the right thing and if they don’t do it initially, then they respond to the nudge,” she says. And in a world where one study found that millennials are spending more on coffee than they are putting aside for their retirement, Titcomb says auto-enrolment is an excellent way for people to start saving.
The big challenge comes around whether they are saving enough. “If people want a better quality of life in later life they are going to need to save more,” says Titcomb, who in January this year was appointed an independent non-executive director of National Bank of Kuwait (International).
Yet auto-enrolment is yet another cost for firms also having to fork out more with increases in, say, the national minimum wage and business rates.
TPR’s role means its “particular focus is on getting people to comply with the piece of legislation for which we’re responsible, but we’re very conscious of the burdens on small businesses,” Titcomb says.
What it can do, “is make our process as easy as possible for them so we have invested a great deal of time in ensuring that the journey that they go on, which most people do through our website, is as simple and as easy as possible”.
In terms of TPR’s remit, the UK government is mulling greater powers for the regulatory body as part of a new consultation launched last month, considering the security and sustainability of defined benefit (DB) pension schemes.
The green paper is looking at DB schemes, many of which are also known as final salary pensions, with about 11 million members in the UK relying on such a scheme for all or part of their retirement income and DB pensions holding about £1.5 trillion of assets.
Titcomb said the green paper “is looking at the particularly challenging landscape for DB schemes at the moment” and points out that most of the approximately 6,000 schemes are in deficit mainly due to low interest rates.
“What the green paper is looking at is first of all is there a systemic problem with the funding of these schemes, and it agrees with us that there isn’t,” she says, with the aggregate deficit across DB pensions standing at £196.5 billion in January. Some are having problems, but there is not a widespread issue that’s going to cause problems, she believes.
“We need to focus on those particularly weak schemes and the green paper explores a number of possible options to help do that, some of which would involve changes to our powers.
“It also looks more generally at our powers and it clearly says that our information-gathering powers and our ability to interview people if we have an issue with what they’re doing needs enhancing. So we’re very pleased that the green paper is out there and we’re very much engaging in the debate on that.”
And just as the financial landscape is going through great changes, she believes TPR must adapt over the next couple of years to achieve its targets. “My ambition is that we are an agile, flexible, strong regulator,” she says.