More than 20 master trusts referred to regulator

More than 20 master trusts referred to regulator

More than 20 workplace pension schemes have been referred to The Pensions Regulator since auto-enrolment began in 2012, amid allegations they are fraudulent.

Pensions expert Henry Tapper, who is the founder of auto-enrolment robo-advice service Pension PlayPen, told FTAdviser he had identified up to 22 master trusts he judged to have a fraud risk.

He said he has referred details of the schemes to the regulator.

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He declined to reveal the identity of the master trusts while investigations are ongoing, but one was putting members’ money into hedge funds.

Pressure is mounting on the government to tighten the regulation of master trusts.

In a report released yesterday (15 May), the work and pensions select committee requested a pensions bill be included in Wednesday’s (18 May) Queen’s Speech to address the “risk from weaknesses in pension regulation”.

The Pensions Regulator declined to comment on Mr Tapper’s referrals, saying it would not discuss specific cases.

Mr Tapper said he was alerted to several master trusts with which he has concerns because they came to Pension PlayPen offering to pay commission for signing employers up to the fund.

He also said it was widespread practice for fund managers to hide behind the apparent 0.75 per cent cap on fees by writing off extra charges as “expenses” against investment returns.

“Whether you call that fraudulent or not I don’t know. But I would call it fraudulent. It is against the spirit of the legislation,” he said.

Minesh Patel, business adviser and director of EA Financial Solutions, told FTAdviser he had also seen some practices among small master trust providers that raised questions.

He said one such master trust included an added “governance” charge that was not included in the 0.75 investment fee.