The 44,000 letters sent by the Pensions Regulator to employers and more than 600 face-to-face meetings held across the industry helped to deliver a promising start to automatic enrolment among large employers, according to the regulators annual report published yesterday.
But chair Michael O'Higgins said: 'Significant tests lie ahead for the regulator and pensions sector as we look to help prepare medium and small employers.'
He identified mid-2014 as 'the first real test of capacity in the market to deliver appropriate and timely advice, software and products to a mass market of newly regulated employers'.
A priority for the regulator has been to ensure the quality of defined contribution schemes into which workers will be automatically enrolled, setting out six principles for trustees to adopt during the design, set-up and operation.
O'Higgins said: 'Having made the important decision to save for their retirement, it is essential that members make the right choices regarding their retirement options. To this end, we will contribute to cross-government and cross-industry discussions on decumulation. Going forward, we will work with the Department for Work & Pensions to help promote its proposed quality standards for DC schemes.'
The economic climate for defined benefit pension schemes has been challenging, O'Higgins said. 'We published statements in 2012 and 2013 to help trustees and sponsoring companies to agree appropriate funding plans, and later this year we will review our DB strategy and funding code of practice.'
The regulator said that during 2012/13 it also responded to the rise in pension liberation fraud with a cross-government awareness campaign targeted at trustees, providers and pension scheme members. Compliance and enforcement activity would continue in the future.
'Pension liberation fraud can occur in situations where people are persuaded to transfer to a new arrangement to release their pension funds before age 55 and convert them into cash. This is not the same as pension unlocking,' the report said.
'The fraud occurs where members are misled about the possible consequences of making such a transfer, in respect of tax, fees and/or investments. We have seen a significant increase in pension liberation fraud since 2011, resulting in known liberated funds of £200m at the end of 2011 rising to at least £400m by the end of 2012.'
