The Pensions Regulator has issued fines of £33,750 in total since November to schemes for failing to complete a detailed value for members assessment, with nearly £20,000 issued this year. TPR has also fined two schemes a combined £13,000 for failing to publish climate reports on time.  

The regulator’s fines follow the announcement of a crackdown on defined contribution schemes in March last year. TPR then carried out a pilot involving hybrid schemes and issued penalties at the end of 2023. The largest VfM fine issued in the first six months of this year was a £10,000 penalty to the Coyne Butterworth Hardwicke Ltd Discretionary Pension Scheme, which is for former employees of an accountancy firm. So far, this year has seen seven VfM penalties totalling £19,250 and three improvement notices.  

The regulator is highlighting the level of penalties issued in relation to value for money ahead of a new value for money framework being brought in, which will consider how schemes compare with their peers in terms of performance and quality of service among others. 
   

   

“Trustees can expect to see more penalties issued as we analyse data from scheme returns,” said Mel Charles, interim executive director of regulatory compliance. 

“These penalties show our determination to ensure DC schemes deliver value for savers. Those that can’t meet our expectations should consider whether a transfer to a better-value scheme and winding up is in members’ best interests.” 

To date, about 17% of DC schemes TPR engaged with as part of its value for money drive have said they would wind up, concluding that their schemes did not offer good value. Scaled up across the 1,323 DC schemes to which the requirements apply, this could lead to more than 200 schemes choosing to wind up, according to TPR. 

Two schemes were fined for not publishing reports in line with the Taskforce on Climate-related Financial Disclosures on time. The GKN Group Pension Scheme was fined £8,000, and the Prudential Staff Pension Scheme £5,000. Both received higher than minimum penalties because their trustee boards are corporate bodies, and GKN’s also includes professional trustees. 

The chair of trustees at manufacturer GKN said the report was not produced in time because of an error in assessing the value of the scheme’s assets. The scheme had different investment advisers for its defined benefit and DC sections, it said, and assets in the DC section were initially overlooked. This was the first time the trustee had breached the regulations, and training has since been undertaken, according to TPR.   

The Prudential scheme published its TCFD report three days late, also the first time the trustee had breached the rule, and the breach was rectified when it was discovered. TPR recommended the trustees put in place measures to prevent a similar breach in future.