The Pensions Regulator (TPR) in the UK ensures that all actors in the pension system fulfil their duties to pension scheme members. The UK’s pension environment changed substantially with the introduction of automatic enrolment in the last decade. The UK phased in automatic enrolment for pensions – similar to Australia’s superannuation system – from 2012 to 2018. TPR had the primary role of ensuring that the implementation was a success. TPR’s experience highlights the importance of aligning consultation, legislation and technology to achieve strong regulatory outcomes.
TPR recognised that it had to get implementation right at every stage to build faith in the new model. Consultation was at the centre of this approach and included three noteworthy limbs:
- It developed the Industry Liaison Team to work with employers of all sizes and across sectors to understand their priorities during implementation
- TPR had the luxury of a long implementation process that it used to get the right implementation for enduring change. Implementation first occurred through larger employers and with very small contribution values – this provided a proof of concept from which to build.
- TPR worked closely with the UK government’s nudge unit, the Behavioural Insights Team, to understand what types of communication would be most impactful for different stakeholder groups. This required higher costs, both in design and in operations, but contributed to strong enrolment outcomes.
The breadth of consultation and substantive engagement meant that the TPR understood employer concerns more deeply. For example, it learnt that one of the primary concerns for employers was effective compliance to ensure that competitors doing the wrong thing did not undercut employers who complied with the new laws. This informed a stronger and more automated, but more costly, ‘conveyer-belt’ approach to compliance. The assurance that compliance was a universal cost increased employers’ willingness to invest in changes.
The need for an automated and broad compliance mechanism highlighted the limitations of the government’s existing data infrastructure. TPR worked with the private sector to develop a data system that would support effective compliance in a system of universal enrolment.