Reducing unnecessary burdens
Duplication is a significant problem within the pensions industry, as schemes currently are required to provide information to numerous agencies. As part of its strategy to eliminate duplication, TPR will explore where it can join up with those agencies to promote a culture of ‘capture once and reuse’ data collection. TPR also says it wants to start a conversation with the pensions industry about modernising systems and improving data sharing where appropriate. The strategy notes:
‘This strong foundation will enable TPR to enhance regulatory insight, improve our decision making and reduce the cost and friction of interacting with us.’
Enabling effective market competition
TPR wants to transform regulatory practices, drive up the quality of schemes and improve value for money, enable transparency, and strengthen collaboration across the entire pensions ecosystem, in order to ‘stay one step ahead in our regulatory duties and deliver our net zero ambitions.’ To achieve this, it plans on using data collection and artificial intelligence (AI) as ‘the backbone of our decision-making processes.’ TPR’s ambitions include:
- Having more nuanced conversations with schemes about their investment decisions and risk controls, to help enable more proactive regulatory interventions
- Possessing high-quality mastered data about trustees and organisations associated with schemes (including master trusts), to gain a deeper understanding of how schemes operate and monitor potential trustee conflicts of interest
- Using data models and AI tools to augment regulatory activity, including analysis of scheme investment strategies, and flagging schemes that deviate significantly from standard practices.
TPR plans on using this technology in identifying and tackling scheme risks more effectively through new technology and ‘best practice’ collection methods and standards. Initiatives will include TPR’s first scheme-facing digital service: Submit a Scheme Valuation, which will allow Defined Benefit pension providers to submit scheme valuations so TPR can determine whether schemes are funded appropriately and deliver benefits to savers, as well as gaining a deeper understanding of how schemes operate while monitoring potential trustee conflicts of interest.
Fostering a more innovative environment
TPR plans to drive the ethical, responsible and sustainable use of technology and data across the industry and support what it calls ‘user-centred policy development.’ To stimulate innovation across the pensions sector, TPR wants to create a ‘Regulatory Sandbox’ to enable safe experimentation of new business models and pension technologies. This will allow pension providers to trial new pension products and services, particular those with a focus on sustainability, without the immediate pressure of full-scale regulatory compliance. As part of its innovation strategy, TPR will encourage the development of pension products that prioritise environmental sustainability and societal impact, and it will develop an ethical technology and data use framework for all pension providers to adopt.
TPR will also encourage a partnership approach across the industry, with providers sharing insights and developing standardised data structures and scheme taxonomies that can be openly shared and integrated. TPR will explore whether it can use open standards for data, such as open data served through an API (Application Programmable Interface) from scheme systems to enable a better flow of data while driving industry-wide innovation. TPR plans to launch an industry working group to agree on the finer details of the strategy, including which areas of data require focus and the common standards needed.
Commenting on the launch of the strategy, Paul Neville, Executive Director of Digital, Data and Technology at TPR, said,
“Pensions are evolving rapidly. TPR is unlocking the transformative power of digital, data and technology to deliver a regulatory approach which delivers better outcomes for savers. Now, we are challenging the pensions industry to do the same. We aim to work with industry to design our approach which protects savers and drives innovation, competition and transparency.”
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