Workplace pension provider The People’s Pension has taken in more than 8,700 new members, as it completed a merger with Your Workplace Pension (YWP).
The master trust – the second biggest in the UK market with almost 4 million members – will receive more than £5m in annual contributions as a result of the merger, which was made in collaboration with JLT Employee Benefits (JLT).
These contributions will rise to around £10m per year following the mandatory rise in pension contributions this week.
Auto-enrolment minimum pension contributions are currently set at 2 per cent – 1 per cent each for employer and employee.
This will increase to 5 per cent tomorrow (6 April), with the employee paying 3 per cent. In 2019 it will increase again to 8 per cent, with the worker paying 5 per cent.
According to Roy Porter, group director of sales and marketing at the provider, “master trust consolidation like this looks set to increase” following new legislation and “The People’s Pension is well-placed to support that”.
Master trust new rules will oblige schemes to be registered, with the legislation expected to come into force in October 2018.
Under the new rules, master trusts will have to hold enough capital to cover costs in the worst-case scenario, such as costs of transferring to another scheme or of winding up, without charging members.
The government and the regulator have been discussing these new rules since 2016, which are expected to drive consolidation in the market.
Mr Porter said: “There are a large number of master trusts in the market but following the new regulation it’s unrealistic to think they’ll all be able to continue.
“Improved regulation will ensure that more members can easily be moved to good quality workplace pension schemes where the employer no longer wants to operate its own pension scheme.”
Last week, The Pensions Regulator published its code of practice for master trust authorisation, alongside a consultation.
The code outlines how these workplace schemes will be expected to meet the new authorisation criteria and what they will need to evidence for TPR to grant authorisation and to continue to operate in the workplace pensions market.
maria.espadinha@ft.com
