Pension administrators to face minimum standards and registration with The Pensions Regulator

The companies that keep the records and pay the benefits for workplace pension schemes are to be brought under direct oversight by The Pensions Regulator (TPR). In its response to a consultation on trustees and governance, published on Tuesday afternoon, the Department for Work and Pensions said it would introduce mandatory minimum standards for administration providers and require them to register with the regulator.

The requirements would apply to administrators of all TPR-regulated schemes, public and private sector. Trustees would keep overall responsibility for running their scheme.

The department gave no start date. It said changes needing legislation would be taken forward at the next opportunity, and that the standards would be designed with the industry and built on existing ones from TPR and the Pension Administration Standards Association.

What administrators would have to do

The standards would cover accurate records, operational resilience and the ability to hand a scheme's administration to another provider. Records would need to be complete and capable of being moved to a new administrator without disproportionate cost, delay or manual rebuilding.

Registration would let TPR request information, investigate concerns and order problems to be fixed. For serious failings it could issue warnings, improvement notices and financial penalties.

Respondents had pointed to the strain that large transfers put on systems and staff as schemes merge, with risks from poor legacy data, migration errors and cyber incidents. Most supported a stronger regulator role, though administrators warned that overly detailed rules could raise costs and fall disproportionately on smaller providers.

Trustees

Around £2 trillion of retirement savings sits in the UK pensions system. The response also changes how the people overseeing it are chosen and checked:

• trustee chairs will have to assess and monitor the collective skills of their board, with reporting to TPR
• master trusts will face wider authorisation checks covering governance and conflicts across the provider, and TPR will approve key function holders
• before a sponsoring employer can move a scheme to a professional corporate sole trustee, the existing trustee board will have to approve it, with a resolution process if it refuses

Sole corporate trustees now run around a quarter of defined benefit schemes, and their use has doubled since 2021, according to industry research cited by the department.

The department decided against several other options for now. There will be no mandatory accreditation for professional trustees, no cap on the number of appointments one trustee can hold and no ban on trustee firms selling advisory services to the schemes they oversee. Where advice comes from a firm linked to a professional trustee on the board, the scheme should be able to explain why that is appropriate and how conflicts are managed.

The department will also consider whether megafunds, the large schemes being created under the Pension Schemes Act 2026, need more trustees than the current minimum. A directory of trustees, first promised in 2023, is to be set up and tested with TPR by 2029.