Sarah Smart: how a classics graduate rose to the top of the UK’s pensions watchdog

Published: November 11, 2025

Interviewee:

Sarah Smart
Former chair of The Pensions Regulator

Few people at The Pensions Regulator knew what it felt like to be regulated. Sarah Smart did. The former trustee reflects on her unexpected journey and the reforms pensions desperately need

“What the hell am I going to do with this?”

It’s a thought familiar to many new graduates – and Sarah Smart was no exception.

“I did study classics ultimately because I was told I could do whatever I wanted to do at university, as I really enjoyed the subject.”

Not the most conventional start for someone who’d rise through non-executive roles to become chair of The Pensions Regulator – but one conversation from her student days stuck with her.

“One of my tutors said to me ‘you’d make a really good accountant’, and I was absolutely horrified and really offended because that wasn’t what I saw in my future.”

Then came graduation. “I thought ‘what the hell am I going to do with this? I am completely unemployable, what a stupid idea to do this’.”

So, she set her sights on accountancy – though for reasons that had little to do with balance sheets.

“I had done lots of scuba diving when I was at university, and spent lots of travelling to and diving off the coast of Scotland.

“And as a result of those trips, I fell in love with the place.

“So I thought ‘if I was an accountant, I can do that anywhere’ – so I trained as an accountant so that I could live in Scotland.”

Entering financial services

So how did she end up in financial services? Well, this began with a trip to a bus garage in Dundee.

“We were auditing Stagecoach buses in their boardroom, which was above a bus garage and all clad in wood inside like a sauna, and the chap doing the audit with me said ‘do you fancy doing X, Y, Z insurance company’s audit with me’. And because we got on and worked well together I said ‘oh, why not’ and that was my first segue into financial services.”

This work led her to eventually join Standard Life Investments, where she was encouraged to challenge the status quo – with her boss telling her “the more senior the person you annoy, the more impressed I’ll be”.

She added: “And in an institution that’s quite old and has a particular way of doing things, some people didn’t like that – particularly not from a young female.”

Early trustee work: building the foundations

It was at Standard Life that Smart made her first steps into the pensions world when she became a member nominated trustee of the company’s pension scheme back in 2004.

Two years later, aged just 32, she became chair of the trustees for the Macmillan Cancer Support Pension Scheme. At the same time, she made her first foray into the non-executive world at a charity in Edinburgh.

These early trustee roles weren’t just line items on a CV. They shaped her understanding of governance, taught her to navigate complex stakeholder relationships, and gave her direct experience of the regulatory system she would later help to oversee.

Move into non-executive work

By 2008, Smart was ready for a change. She had spent years in the corporate world and wanted to do something different with her career.

“When I left, I wanted to do jobs that helped the financial services industry become more about delivering what people really needed and working in a way that helped people, rather than just made money off them.

“And I thought the way to really do that systematically is with an organisation like TPR, where you can really change how the whole industry works in a certain way.”

With this goal in mind, Smart made the decision to leave Standard Life Investments and begin non-executive work – first, and most notably, spending time at the London Pensions Fund Authority.

This period taught her a number of important lessons – particularly due to the make-up of the fund.

“LPFA is not quite the same as other LGPS funds, certainly at that time, in that it doesn’t have a Pensions Committee because it’s not associated with one council or administering authority.

“This did mean there were lots of people from many different spheres of experience and backgrounds. This experience taught me how to bring all those spheres of experience together in the right way to form a good view.”

There were also interesting investment challenges to work through – particularly legacy issues with the liabilities of the old Greater London Council (GLC) and Inner London Education Authority (ILEA) funds, as while London councils did not want to have to make further contributions towards them, the pensions still needed to be paid.

An amount of money had been paid to LPFA at a point in time to pay the liabilities, but the expectation was it wouldn’t need any more money. As time went on and interest rates fell, this became increasingly problematic.

Smart added: “I think the other thing that was important for me in that experience is the importance of understanding all the risks you have, whether that’s interest rates and inflation risk, or equity, credit or liquidity risk.”

Joining the regulator

Her time at LPFA also coincided with her first attempt to join TPR as a non-executive director. She was unsuccessful, but the ambition remained.

In 2014, and during a stint as an independent professional observer at Lothian Pension Fund and as both board member and chair of the audit committee at UK Athletics, she applied for a second time to join the regulator – this time for the role as chair. Again, she was unsuccessful.

“Shortly after Mark [Boyle] was appointed chair, I sat next to him at an event and said ‘you got my job’. So, we got chatting, and I told him all the things I thought the regulator should be doing, and he said ‘this is really good stuff’ and encouraged me to apply again.”

That encouragement paid off. She joined the board in 2016 as a non-executive director, bringing with her years of trustee experience and a clear vision for how regulation could better serve savers.

Not long after that, the BHS pensions scandal took place. Coming after the firm fell into administration, it saw 20,000 pensioners facing cuts to their retirement benefits – with the scheme having a deficit of £571 million.

In response, TPR pursued anti-avoidance against former BHS Philip Green owner and Dominic Chappell – who had purchased the business for £1 a year earlier. This led to Green agreeing to pay £363 million into a new independent scheme to safeguard pensions.

The BHS scandal prompted significant reflection within the regulator about its approach.

Smart added: “It was part of an initiative led by then chief executive Leslie Titcomb to focus on being very clear with our regulated community about what we want, to be quick at looking at what was going on, and where we saw instances of poor governance and behaviour to be tough on reacting to that.

“For example, TPR has criminal powers – as many regulators had – but we had never used them before Leslie became chief executive, and we have since in many areas, particularly on financial scams.”

Becoming chair: communication and collaboration

Smart took on the role of chair of TPR in 2021. Appointed by the Secretary of State for Work and Pensions, she was required to go through a pre-appointment hearing in front of the Work and Pensions Select Committee.

“I mean having a job interview is bad enough” she noted, “but having one that’s streamed live over the internet when your mum’s watching, it’s really not fun.”

The key difference from Smart and those who had chaired the regulator before was that she knew what it felt like to be “on the other side of the table”, giving her an understanding of how the people the regulator was talking to might feel and where they might be coming from.

“My approach to engagement has always been trying to be open, honest, collaborative, and getting as much feedback as possible.

“It’s easy for people within the industry to chuck stones at the regulator and say ‘we don’t like anything you’re doing, it’s rubbish’, so as a regulator it’s important to help people understand what we’re trying to achieve.”

With this in mind, she always considered who the regulator was targeting their communications at – because there’s “quite a wide spectrum of people involved”. This can range from full-time executives who work solely at pension funds to members of pension committees, some of whom may know very little about pensions.

Having said this, with the rise in professional trusteeship, she believes it’s “probably sensible” to have guidance aimed directly at that more informed, professional market as the role of these individuals can be to explain things to the lay trustees they work with.

This connected to a broader shift in the regulator’s approach. “The regulator now is moving more towards being principles based, and that doesn’t chime with ‘I’m going to tell you XYZ of everything that you need to do’.

“In some cases, things don’t necessarily turn out as you like, but if they’ve been diligent and done their job properly, then that’s what should be expected of them.”

The presence of professional trustees on boards, she believes, should be a requirement for every pension scheme.

She also saw part of the regulator’s role as supporting ministers, government officials, and civil servants in policy development by bringing knowledge, expertise, and historical understanding of how things have developed.

This advisory role would prove crucial during the most dramatic crisis of her tenure.

Coping in crisis: the LDI meltdown

September 2022. The UK gilt market was in freefall. Pension schemes across the country faced an unprecedented crisis.

Liability-driven investments are typically used at DB pension schemes and are designed to match the scheme’s assets to its liabilities by targeting interest rate and inflation risks.

These were thrown into crisis following the 2022 mini budget, which put extreme pressure on the UK’s gilt market – primarily caused by pension funds using leveraged LDI strategies to hedge against interest rate risk.

As such, when the gilt yields rose sharply following the mini budget, these funds faced large “margin calls” and had to quickly raise cash – forcing them to sell large volumes of gilts at fire-sale prices.

During this time, Smart and TPR were working closely with government colleagues – alongside the Bank of England, PRA and FCA – explaining the fundamentals of LDI, what the benefits and downsides were, how the system works, and when looking at threshold levels of liquidity, what the implications would be.

“We weren’t saying ‘no, you can’t do that’, but we were saying ‘if you choose this course of action, then these are some of the possible implications’.”

She went on to say: “As you can imagine, it’s very difficult for government ministers. They’re suddenly being parachuted into that situation, and then they have to understand the concept of LDI and how it will work, as well as the pension system as a whole.

“Our job was to try and help get them up to speed very quickly and understand what they needed to do.”

Looking ahead: reforming the system

The experience of managing through crisis, combined with years of observing the pension system from multiple angles, crystallised Smart’s thinking about what needs to change.

“The reality is when you’re chair of an arm’s length body, there are constraints around what you can do,” she explained.

“If you didn’t have the constraints of working within arm’s length of a government department then there’s lots of things you’d do differently, but that’s not the reality and I understand why there’s checks and balances.”

One change, in particular, that needs to be at the very least added to any reform agenda is whether individuals should choose where their workplace pension goes, rather than a company.

“I know there are those who argue against this, but I do think people would engage with pension schemes more if they were choosing one pension scheme and then keeping their savings within that, and that pot would follow them around, and employers would put their money into that pot.

“I know there are people who draw attention to the disadvantages of the Australian system, where a lot of money is spent on marketing rather than delivering good outcomes for members, but with the right framework and regulation, we could avoid those pitfalls.

“But I think it would be much easier for individuals to keep track of their pensions and be invested in building up a decent pot.”

And, given what the market will look like in the coming years, it will be something that’s much easier to implement.

Smart said: “We have had a situation where there’s many different pension schemes, and you can imagine if an employer had 10,000 employees spread across 2,000 different pension scheme choices, then the employer would have to have links to 2,000 different systems to pay contributions into. It would have been an administrative disaster.

“In the future, when we’re looking at a much more consolidated DC environment, which the vast majority of members will be in, combined with the technological advances we have now, that administrative problem has largely gone away.”

Restoring confidence

This could be one way to restore public confidence in the pensions system, something that Smart sees as a major issue for the industry.

“I’m worried about people losing faith in the system. I read some analysis recently about the amount of people taking money out of their pension schemes in the run up to the budget last year because of tax changes.”

As such, she believes the government needs to stop tinkering with the tax around pensions, although she conceded that’s probably a hope too far.

“So, I think not playing around with tax too often and having a consistent message for people about pension saving that they can believe will be visible for a long period of time is really important for retaining confidence in the system.

“Whether that’s likely to be achieved I don’t know because the reality is whatever pension we have there are massive tax implications for what happens there, so the de-politicisation of it, taking out of serious budget considerations, I don’t see that happening anytime soon.”

Smart’s journey from classics graduate to chair of The Pensions Regulator demonstrates the value of having experienced regulation from both sides. Her approach – balancing collaboration with enforcement, informed by years as a trustee and non-executive – helped modernise how TPR engages with the industry.

As she steps down, challenges remain around public confidence and system reform. But she leaves behind a regulator more willing to use its powers when needed and more focused on delivering real outcomes for savers.

Not bad for someone who once thought studying classics made them “completely unemployable”.