Laws overhauling the regulation of auto-enrolment master trusts will force consolidation and create “bigger and stronger” providers, the chief executive of AE provider Now: Pensions has said.
Morten Nilsson said the new requirements would make it harder to comply with the rules, forcing many smaller players out of the market.
“For a long time Now: Pensions had been campaigning for tighter regulation of master trusts. I was surprised when we entered the UK market at just how easy it was to set up a master trust," he said.
“It was simply a case of sending a form off to HM Revenue & Customs and The Pensions Regulator, nothing more.”
But he said a BBC investigation had put the spotlight on the issue and led to the eventual Pension Schemes Bill, which is currently going through the House of Lords.
Mr Nilsson said the most "notorious" example of abuse of the lax rules uncovered by the BBC was a provider called “My WorkPlace Pension” which claimed to have £50m of pensions under management handled by Old Mutual.
“After being probed by the BBC it became clear that it had no association with Old Mutual and that the directors of the company had interests in another firm which sold sports fashion wear with a trading name at Companies House of 'Wide Boys R Us'.
“Possibly a joke at the time but one that didn’t sound so amusing when you are in the serious business of pensions,” Mr Nilsson said.
Mr Nilsson also praised former pensions minister Ros Altmann for her role in improving the regulation of master trusts.
Mr Nilsson went on: "One of the side effects of the Bill will inevitably be some much needed consolidation in the market. I am optimistic that the remaining players will emerge bigger and stronger from this cathartic process.
“Employers who do find their master trust merging with another can expect improved services from their new pension provider,” he said.
james.fernyhough@ft.com
