The Pension Regulator’s (TPR) master trust authorisation regime opens its six-month application window for master trust authorisation on 1 October 2018.
TPR recently said that it had received 33 applications from master trusts that are seeking full authorisation in order to continue to operate in the market.
Under the new rules, master trusts will be required to hold enough capital to cover the cost of a worst-case scenario, including the the cost of transferring to another scheme or of winding up the business, without charging members.
TPR recently launched a readiness review, in which master trusts looking to be granted authorisation participated, so they could be helped to prepare for the official authorisation process.
A source close to the process said some of the master trusts involved in the readiness review have been told by the regulator that they are a long way from being ready to make an official application for authorisation.
The limited time frame given to master trusts to prepare for and undergo the authoirsation process is of concern to those taking part in the process.
We have known that we are bound by the time frames because they are written in legislation and it is a business priority to work within those time frames. Adrian BouldingGraham Peacock, managing director at Salvus Master Trust, said: “The time frame for the authorisation is horrendously challenging.
“The regulator is being dynamic and we have have received feedback from TPR already as we submitted a readiness review which was optional. Industry-wide recommendations following the readiness review haven’t been published yet and the window for authorisation opens in October.
“It will likely be closer to the end of the year when TPR sees a flury of submissions for authorisation. This is because cross referencing the response to the readiness review submission and making sure everything is above board is a very long process.”
Bruce Kirton, chief executive of Welplan, said: "The TPR is being quite thorough with its feedback to the readiness review.
"The window of October to March is quite short considering master trusts will need talking time and feedback from the regulator. We expect many master trusts will chose not to seek full authorisation and leave the market, we expect there will be consolidation in market as a result."
The TPR has acknowledged the concerns about the timings of authorisation but it has said that it is important for protection for savers to be implemented as soon as possible.
A TPR spokesperson said: “In the development of master trust authorisation we have worked closely with the DWP to agree timelines and timescales.
"We are aware of industry concerns that the timings of authorisation are tight but it is important that these new protections for savers are implemented as soon as is practically possible. The timescales of authorisation are established by parliament.
"We have been working with master trusts for two years, including keeping schemes up to date about the process of implementing authorisation and consulting with the industry on the code of practice and supporting guidance.
"To support schemes in their preparations for authorisation we also ran readiness reviews, a voluntary process for schemes to test their applications. We continue to engage with and support schemes. The six month application window opens on October 1."
Adrian Boulding, director of policy at Now: Pensions, said: "We have known that we are bound by the time frames because they are written in legislation and it is a business priority to work within those time frames.
"One of our biggest concerns is whether or not TPR has that resources to deal with the workload. The regulator is likely to receive 30 to 40 applications and a lot of those are going to be around 1,000 pages long, you would hope that they have recruited enough staff to deal with this.
"TPR is publishing its guidelines for authorisation on 1 September and this doesn't give us a lot of time to respond. But the time frames have been set out, so there is no point in grumbling about it now.”
