All master trusts can start the process of becoming authorised today (1 October) and hold reserves to cover potential wind-ups under new rules from The Pensions Regulator (TPR).
Only authorised master trusts will be able to continue to operate and will be listed on the The Pensions Regulator's website and they have a six month period to achieve this status.
So far, 30 master trust companies have decided not to apply for authorisation and already have or plan to exit the market.
Kate Smith, head of pensions at Aegon, said: "This new regulation will drive up standards and make master trusts more financially sound, but most importantly offer greater protection to members.
"To be authorised master trusts will have to prove they are financially sustainable, have business continuity plans in place and be run by people meeting the regulator's fit and proper test."
Ms Smith said she expected more master trusts to exit the market as stronger regulation and ongoing supervision bites, potentially cutting the number of schemes in half in a year or so."
Recently, consultancy firm Hymans Robertson revealed the performance of 16 workplace pension schemes in its eight page report ‘Master trust default fund performance review’.
The report revealed that Mercer and the National Pension Trust outperformed the rest of firms on a relative basis.
FTAdviser reported back in August that there has been concern within the master trust market about the time frames for authorisation that have been put in place by the The Pensions Regulator.
The regulator has acknowledged the concerns from master trusts, but has said that it is important that protection for consumers is put in place as soon as possible.