Around 20 workplace pension providers won't apply for formal authorisation to be master trusts with The Pensions Regulator (TPR), Baroness Buscombe has revealed.
The Parliamentary under-secretary of state for pensions said last week (18 July), at a debate at the House of Lords, that the watchdog "is currently working closely and effectively with 20 schemes that have already either closed or signalled their intention to leave the market".
These schemes are "considered small, legacy, sub-scale and non-core business," she added.
The regulator's work with these providers "includes assisting them with finding appropriate destinations for their members," since current regulations for winding up schemes "ensure that members are made aware, allowing them to decide individually whether to accept the trustees’ default destination or make their own arrangements," Baroness Buscombe explained.
From the current 81 schemes in the market, 40 to 45 are expected to submit a formal application when the window for registration opens in 1 October, she said.
Under the new registration process, master trusts will have to hold enough capital to cover the cost of a worst-case scenario, such as the cost 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.
Baroness Buscombe also confirmed that 33 schemes have submitted voluntary applications for the new registration regime, as FTAdviser reported last week.
The watchdog announced in March it would launch a readiness review in May to help these schemes prepare for formal application, which they will need to file if they want to continue to operate in the market.
Kim Brown, head of master trust authorisation and supervision at the regulator, said at the time that The Pensions Regulator was aiming to give feedback to schemes on their readiness reviews by 31 August, regarding the quality of their evidence and any areas that need to be improved.
However, submissions as part of this review weren't binding, as the workplace pension providers will have to submit a formal application in autumn.
maria.espadinha@ft.com
