The Department for Work and Pensions (DWP) has asked the Pensions Regulator to reduce its cost base by 25 percent over the next four years, according to the corporate plan published by the UK’s pension regulator on May 5, 2011.
The regulator has already managed to cap fixed costs by achieving economies of scale on certain transactional processes and reduced costs further with increased efficiency by collaborating with other organisations.
The expenditure cut has been ordered as more pension schemes are closing to new members as well as to future accruals.
The regulator said 21 percent of schemes closed to future accruals while 58 percent closed to new members in 2010. The percentages were 44 and 12 respectively in the year 2006.
The cuts will be effective for the year 2011-12 on the regulator’s planned budget of £30.4 million. The approved budget for the year 2010-11 was £29.5 million.
The regulator’s mandate is to ensure that the pensioners interest is safe-guarded and with the expansion of direct contributions pensions and automatic enrolment, the government is trying to ensure that.
“We will be working closely with the industry to support good outcomes for new and existing savers”, said Michael O’Higgins, chair of The Pensions Regulator.
“Against a backdrop of budgetary constraints, we will continue to target our resources at the areas of greatest risk to members and the Pensions Protection Fund, and to regulate in a transparent and proportionate manner”, he added.