Recommendation 29

HM Government Acknowledged

The Pensions Regulator (TPR) is working to ensure its processes thoroughly assess the value for money that independent trustees (ITs) provide. This includes comparing the amount recovered with the costs of doing so and the impact upon members’ pensions pots. While likely to be specific to each appointment, this work will help ensure savers are not only protected but get good value. However, determining what represents value for money in the context of pensions scams is challenging. TPR appoints ITs to take control of the administration of a scam scheme, stopping more people from becoming victims and having their pension stolen and to preserve assets. It disrupts the scammers and the IT’s work assists in gathering evidence that could help to prosecute perpetrators. The IT plays a vital role in shutting down a scam and they are skilled professionals. Often, by the time an IT has been appointed, most of a scam scheme’s funds have already been lost and are unrecoverable, which is why so much emphasis is put on communications to prevent savers from becoming victims in the first place. The costs in dealing with scam schemes are significant. Typically, such schemes have no meaningful administration or financial records. Often scheme documentation is deficient and requires legal input and, sometimes, court direction. The work is often time- consuming and complex involving pursuing money across multiple jurisdictions. Where schemes have been used as a vehicle for pension liberation, there can also be complex tax issues to deal with. Legislation means the costs of this work have to come from members’ residual funds. While TPR can order trustee costs to fall as a debt on the employer, scam schemes are usually linked to an employer that is not trading and has no assets. 20 Responses to the Committee’s Fifth Report of Session 2019–21 TPR runs a competitive tender process to select the trustees that can provide the best value for money. They have increased the number of firms they invite to tender for each appointment type. This used to be around three for scams cases, but they are encouraging a minimum of five and expect this number to increase. They are holding annual meetings with trustees on the trustee register to encourage cooperation with them and build relationships, which they hope will increase the volume of tenders. Trustees on their register agree to have their costs and fees scrutinised by an independent adjudicator and to be bound by that adjudicator as to fees and costs. Once appointed, trustees update the Regulator regularly on their progress, including costs and fees incurred. This information is considered and compared to the trustee’s tender for the work. Any significant variance will be open to challenge from TPR. However, feedback from firms is that these appointments are not generally seen as desirable or profitable often making little to no profit, and often a loss on them. Not all firms are interested in receiving invitations to tender. This is challenging work, requiring a certain skillset, level of experience and business model. There is often a slim profit margin, and even an uncertainty of receiving full payment at all as assets may prove difficult or impossible to recover. Therefore, only a certain number of independent trustees appear to be interested in the work and only a certain number have the staff with the relevant skills and experience often required at short notice.