The Pensions Regulator will review the amount of capital reserving master trusts must hold, along with other commitments it has made as part of the government’s deregulation drive.

On Monday, chancellor Rachel Reeves is meeting with the heads of seven regulators and the Regulatory Innovation Office in Downing Street to set out an “action plan to cut red tape”, saying this will support UK economic growth.  

As part of this, the Treasury cites “simplifying” guidance on the protection of natural habitats when building, and being “pro-business” as more regulators are “axed” and their legal duties “streamlined”.  

Reeves said: “Today we are taking further action to free businesses from the shackles of regulation. By cutting red tape and creating a more effective system, we will boost investment, create jobs and put more money into working people’s pockets.”   

The measures are introduced amid a decline in job vacancies and lower business confidence after the chancellor announced last October that she would hike the amount of national insurance employers must pay per employee and increase the minimum wage, both taking effect next month.  

The government’s action plan comes with 60 pledges by regulators, including TPR, whose most notable commitment is a review of capital reserving for master trusts “with a view to safely freeing up millions of pounds for schemes by the end of 2025/26”.

A spokesperson for TPR said: “We are committed to creating a proportionate regulatory environment which protects pension savers’ money, enhances the pensions system, and supports innovation in savers’ interests. We will continue to engage with the market and government to make this vision a reality.”*

As well as reviewing capital reserving in these large DC scheme providers, TPR will also develop a framework and criteria to trial pensions innovation ideas and launch a hub to test a variety of innovation services with the market by the autumn of 2025. 

Over the course of 2025-26, TPR will monitor its engagements with schemes and employers seeking to reduce the regulatory burden “whilst maintaining current high levels of compliance”, meaning it will monitor the quality and value of regulatory interaction.

The regulator will conduct a review of its scheme return and supervisory return data collection requirements by the end of March 2026, to identify options to reduce the burden on schemes. Depending on the outcome of this review, the government will consider how and what TPR captures, potentially amending legislation. 

TPR has also said it will encourage consolidation and consideration of investment in productive assets through the incoming value for money framework, which will include public disclosure of investment performance. In advance of this, TPR will encourage voluntary disclosure of asset allocation data “to shine a light on the relationship between asset allocation and net performance”. 

   
The government had written to regulators, including TPR, in early January asking them to come up with proposals to foster economic growth. 
   

    

Helen Forrest Hall, chief strategy officer at the Pensions Management Institute a former head of regulatory communications at TPR, welcomed the regulator’s focus on innovation. She said the PMI eagerly anticipates collaborating with the new Hub sharing insights from its Global Innovation Centre, including its ‘Lifetime Savings Initiative’. 

 

“We are committed to continuous innovation, exemplified by our Lifetime Savings Initiative which has driven actionable recommendations to address barriers to financial security and help build a sustainable UK savings model,” Forrest Hall said.  

A spokesperson for the People’s Pension said the master trust feels TPR's recently trialled new supervisory relationship with larger master trusts is working well, and is encouraged that TPR is thinking "creatively" about the regulatory load on pension schemes. 

  

“We look forward to engaging with TPR on capital reserving but note that the aim of capital reserving is to ensure that master trusts schemes can be wound down safely in the event that they can no longer continue," the spokesperson said.

  

“We also see TPR’s engagement in the roll-out of value for money metrics as important – making sure that these accurately convey value, while remaining consistent with government’s wider policy objectives, including productive finance, will be critical to the metrics’ success," the spokesperson noted.

  

The industry needs certainty and simplicity, said Tess Page, UK wealth strategy partner at Mercer. 

  

“Mercer is supportive of any changes to provide better outcomes for savers, and these proposals look sensible to reflect the changing nature of the market,” she said. “There are lots of regulatory changes proposed in the pensions space currently. Changes to regulations need to be done for the right reasons and what is needed is certainty and a focus on simplification.”  

The insurance sector is also set to see some changes. The Financial Conduct Authority and Prudential Regulation Authority have committed to reduce regulatory reporting requirements, and the PRA will consult next month on a matching adjustment investment accelerator aimed at reducing the time between life insurers identifying a productive investment opportunity and making that investment.  

 

The Association of British Insurers has welcomed the government's announcements on regulation. ABI director general Hannah Gurga said: “Appropriate regulation of our financial services is essential to a well-functioning system. But it also must be proportionate if it’s going to encourage the innovation, investment and growth our customers and economy need. The government’s commitment to making a more effective, streamlined system through its Action Plan is a welcome intervention.”