MPs warn on pension schemes

The regulator should be more proactive, the report says

Ministers must tighten up the regulation of occupational pension schemes or risk another Maxwell scandal, a committee of MPs has warned.

The Commons Public Accounts Committee says the watchdog set up to safeguard pension schemes has failed to address major risks.

Both the Occupational Pensions Regulator (Opra) and the Department of Work and Pensions spend too much time on "trivial" breaches, the committee says in a report published on Friday.

Harriet Maunsell, the chairman of Opra, denied that her organisation was a waste of time.

But she told BBC Radio 4's Today programme that she agreed with the thrust of the report and thought the regulator needed greater powers.

The report's findings reflect similar criticisms levied by the National Audit Office last year.

Change of approach

Opra was set up in the aftermath of the Robert Maxwell affair.

It is worrying that Opra has done so little to monitor scheme trustees, the first line of protection for pension scheme members

Edward Leigh MP

The late media tycoon stole hundreds of millions of pounds from the pension schemes of his various companies.

It was set up to ensure that company pensions schemes meet their obligations to members and are properly run.

But the public accounts committee said it could not be sure Opra could prevent a similar scandal happening again.

Opra was also accused by the committee of doing little to check the suitability of trustees.

The committee accused it of being unclear about its powers, for example, to discover whether trustees have criminal records, it said.

Instead, it had concentrated on minor breaches of the Pensions Act.

For example, over 60% of the 56,000 cases investigated by Opra concerned late payment of pension contributions, but over half of these were only 10 days late.

Edward Leigh MP, chairman of the committee, said: "Opra has made little progress in developing an approach that would more actively seek out schemes where the risks are greatest."

Recommendations

The currently pensions regulatory framework relies on scheme trustees and their professional advisers to protect members' interests.

The committee is recommending Opra to improve checks on trustees and other advisers, and work with the Department to "clarify and, if necessary, strengthen its powers to do so".

"It is worrying that Opra has done so little to monitor scheme trustees, the first line of protection for pension scheme members, and cannot be sure of preventing another Maxwell case, said Mr Leigh.

"It is vital that Opra and the Department deliver on their commitment to overhaul pensions regulation.

"They need to be more proactive, target higher risk schemes and focus on tackling major risks to pension scheme members rather than wasting valuable resources investigating minor breaches of the regulations."

Ms Maunsell said she thought that checking more than 240,000 trustees was probably not necessary but she agreed with the need for change.

"We think that a regulator ought to be more pro-active, ought to be doing more and ought to be focusing on the real risks."

The government's pensions green paper, which was published in December 2002 recommends a new "proactive" regulator.