Regulation  

Tighter rules for master trusts in Queen’s Speech

Tighter rules for master trusts in Queen’s Speech

Master trusts pension providers will need to demonstrate their schemes meet strict new criteria before entering the market and taking money from employers or members, according to a new rules released as part of the Queen’s Speech today (18 May).

Under a new Pensions Bill, the Pensions Regulator will be handed greater powers to authorise and supervise schemes and step in when necessary.

The powers have yet to be detailed. But the new Bill promises to provide better protections for members of master trust pension schemes, including millions of automatically enrolled savers.

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Before entering the market and taking money from employers or members, master trusts will need to demonstrate their schemes meet strict new criteria, as yet undisclosed.

Yesterday (17 May) FTAdviser reported smaller master trusts have welcomed stricter regulation of the auto-enrolment sector, after widespread criticism the industry and MPs - but warned against over zealous changes to capital adequacy requirements.

Master trusts - pension providers that manage centralised workplace pension funds for several companies at the same time - which hold lower amounts of retirement savings have come under particular fire, amid accusations of poor governance and investment management.

Elsewhere in the Bill, early exit fees charged by trust-based occupational pension schemes will be capped and a system will enable consumers to access pension freedoms without ‘unreasonable barriers’.

Pensions freedoms gave people aged 55 and over a wider range of choices over how they take thier pension pot, rather than having to buy a retirement income called an annuity.

Some people found that after the freedoms started, they could not access their pot in the way they wanted to.

ruth.gillbe@ft.com