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Pensions

Regulator launches master trust consultation

Regulator launches master trust consultation

Mona Dohle
Thursday 26th July 2018

Ahead of the deadline for master trust authorisations, The Pensions Regulator (TPR) is seeking the views of industry participants on its draft policy proposals published in late July.

From October, master trusts will be faced with a six month deadline to receive TPR authorisation in order to continue their operations in the UK.

The proposals, which follow the introduction of the Pension Schemes Act 2017, aim to outline the authorisation process for master trusts as well as criteria for a possible enforcement action by the regulator if the 2017 Act is breached.

The Pensions Act aimed to provide clarity to the growing number of master trusts, i.e. multi-employer pension schemes, which have entered the market since the introduction of automatic enrolment.

Whilst offering operating costs compared to single-employer schemes, the regulator remains concerned that master trusts carry specific risk such as the profit motives of sponsoring employers and as a result of the number of savers involved.

An example includes the Smart Pension Master Trust, which was fined £15,000 for failing to report £900,000 of unpaid employer contributions.

Earlier this month, the regulator has revealed that in order to be authorised, schemes with less than 2000 members will have to hold at least £150,000 in reserve.

TPR now proposes routine as well as risk-based targeted monitoring of master trusts in the UK and impose financial penalties or even start a criminal prosecution if the trust in question fails to disclose information to the regulator.

Kim Brown, head of master trust authorisation and supervision at TPR comments: “Authorisation will create a market with better safeguards. To do that we need to set the standards which every master trust must meet to operate once they have been authorised, or set up in the market.

“We will also supervise these schemes to ensure that they continue to meet the authorisation criteria, are well-run and offer good value for members,” she stresses.

Industry participants will be able to respond to the online survey on the TPR website until the 23rd of August.

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