The trustees of Salvus Master Trust have been fined a total of £5,000 by The Pensions Regulator (TPR) for failing to promptly invest members’ savings for three years.
This penalty, issued in November 2017, is the maximum fine that could have been imposed, the watchdog said in a statement today (11 October).
The failure from the workplace pension provider lasted for three years, and affected 9,081 members and contributions of £1.4m, TPR said.
Currently, Salvus looks after more than £150m in assets for its 60,000 members.
Trustees are required by law to process and invest contributions from employers promptly and accurately. This was The Pensions Regulator's first penalty issued following such a breach.
Salvus’ trustees reported the problem to TPR, along with a plan to rectify the failure to invest pension contributions and address the historic administration problems which led to the breach.
The master trust worked with the regulator to address the problems, and make sure all of the affected members were returned to the financial position they would have been in if this error had not occurred, according to a spokesman for Salvus.
According to Nicola Parish, executive director of frontline regulation at The Pensions Regulator, leaving "so much money uninvested over a period of 18 months is clearly unacceptable".
She said: "Our engagement with Salvus has ensured that not only the thousands of members affected have not suffered any detriment, but also the master trust's systems have been improved to stop this happening again.
"New legislation for master trusts came into force on 1 October, which puts safeguards around these schemes to better protect members.
"Master trusts have to prove that they meet standards in five areas, including proving that they have adequate systems and processes. We will continue to take tough action to against schemes which do not meet their legal duties.”
These schemes have until the end of March 2019 to apply for authorisation with The Pensions Regulator and comply with new rules which mean these schemes will have to hold enough capital to cover 'worst-case scenario' costs.
Steve Goddard, founder of Salvus Master Trust, said the provider has revolutionised its digital operations and automated its processes since the incident "to make sure that situations such as this cannot re-occur".
He said: "As soon as we were aware of the systems error which led to the backlog, we immediately brought this to TPR’s attention, along with a proactive plan that ensured no members have lost out.
"Today our robust online processes ensure that once employers load data into our system, contributions are collected and invested automatically."
Michael Clark, chair of Salvus Master Trust Trustees, said the trustees worked closely with the administrators and Goddard Perry – the master trust sponsor - to implement an action plan and regularly updated the regulator with progress reports.
He said: "The trustees were delighted with the support and action provided by Goddard Perry, which ensured that no member suffered any detriment, which was always at the forefront of our minds."