Press Notice No. 15 of Session 2002-03, dated 2 May 2003
FIFTEENTH REPORT: OPRA: TACKLING THE RISKS TO PENSION SCHEME MEMBERS (HC 589)
Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, today urged Opra and the Department for Work and Pensions to overhaul their approach to pensions regulation and focus more on tackling major risks to pension scheme members.
Mr Leigh was speaking as the Committee published its 15th Report of this Session, which examined the regulatory framework under which the Occupational Pensions Regulatory Authority (Opra) currently operates and how Opra and the Department for Work and Pensions have implemented this framework; Opra's approach to breaches of pensions legislation; and the development of a new kind of regulator.
The Committee found that Opra and the Department have been slow to develop objectives and tackle legislative constraints and as a result have failed to address major risks to pension scheme members. In contrast to the legislation governing other regulators, the current regulatory framework does not set out Opra's objectives or functions, which has made it difficult for Opra to operate effectively. Only in 2002 did Opra and the Department agree objectives that set out what Opra were intended to achieve. Nor did they analyse the key risks to pension scheme members, such as theft and maladministration, so as to determine what checks it should have in place. Doubts about the scope of Opra's powers were not pursued, for instance its inability to require information on schemes about such risks as inappropriate trustees or lack of professional advisers.
Opra did not consider that it could be sure of preventing another Maxwell case. Opra was set up in the wake of the Maxwell case, but has largely limited its work to tackling reports of procedural breaches of the Pensions Act 1995. While reports of this kind might alert it to possible theft once it has occurred, Opra has made little progress in developing an approach that would more actively seek out schemes where the risks are greatest.
Opra has done little to check the suitability of trustees or the appointment of advisers to pension schemes. It was unclear about its powers to do so, even to discover whether trustees have criminal records. The regulatory framework relies on scheme trustees and their professional advisers to protect members' interests. Opra should institute appropriate checks on the appointment of scheme trustees and their professional advisers, and work with the Department to clarify and, if necessary, strengthen its powers to do so.
Opra has focused on trivial cases. Opra has been overwhelmed by mostly 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.
Mr Leigh said today:
"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. 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."
to view the Report