Auto-enrolment master trust Smart Pension is looking to acquire other providers in 2017, as new regulations put pressures on smaller players.
A new pensions bill will force master trusts to fulfil a number of requirements, including capital adequacy and governance standards.
Smart Pension managing director Will Wynne said: “While we’re confident we already comfortably comply with these proposed changes including mandatory capital adequacy and a fit and proper persons test, the industry will also need to be ready to form a safety net to absorb some of the unstable, underfunded master trusts that will be exposed by these changes.
He said the firm had already been approached by a master trust, adding: “Smart will be in the market for an orderly transition of members from other trusts as the market consolidates.”
Mr Wynne said another major event for 2017 could be new, stricter rules forcing employers to treat contractors as employees rather than self-employed workers.
“We are also expecting to hear some news around automatic enrolment for the self-employed, after the recent Uber ruling highlighted the fact that it’s not only contracted employees that qualify for auto enrolment.
“This will have a huge impact specifically on the small business community that has been growing through outsourcing and collaboration rather than taking on employees," he said.
In October an employment tribunal ruled that drivers for the app-based taxi service Uber were not self-employed, and therefore have employment rights, which could include being auto-enrolled into a workplace pension.
Another key issue, he said, would be payroll integration with auto-enrolment providers.
He said as more small firms grappled with their new auto enrolment responsibilities, he expected to see much more movement around the automation of these functions.
Mr Wynne said the increase of contribution rates in 2018 was another major event on the horizon.
“Member contributions are set to increase to 3 per cent in April 2018 with the employer contribution to rise from 1 per cent to 2 per cent. By that stage existing small businesses will all be enrolled.
“The increases in contributions, while absolutely correct, will have a disproportionate impact on smaller firms. We need to keep a close eye on this impact moving forward as opt out rates are likely to rise, which could knock auto-enrolment slightly off course,” he said.
james.fernyhough@ft.com
