Lighthouse Group is winding up its Corporate Pensions Trust (CPT) following fears the new authorisation regime for master trusts will be too costly.
The group stated all CPT members have been notified and will be transferred over to Smart Pension Limited, which is part-owned by Legal & General.
In September 2018 the group announced a strategic review of the business following the introduction by the Pensions Regulator (TPR) of a new authorisation regime for master trusts, which comes into operation on April 1.
Following the review, the company concluded the new regime would significantly increase the annual running costs, both in the year of initial application for authorisation and in all subsequent years, as well as the capital required to be held to meet any future wind-up costs.
Malcolm Streatfield, CEO of Lighthouse, said: "Given the investment made by the group to date in establishing and maintaining the Lighthouse Pensions Trust, the significant increase in operating costs that will arise from the Pensions Regulator's new authorisation regime, and the highly competitive market for the provision of auto-enrolment compliant workplace pension schemes, the maintenance by the group of the Lighthouse Pensions Trust, within the Corporate Pensions Trust, could no longer be justified."
The CPT is the unbundled master trust incorporating the Lighthouse Pensions Trust, the group's proprietary solution for small and medium sized businesses looking to meet their obligations to provide auto-enrolment compliant workplace pension schemes.
The proposed transfer to Smart has been approved by the trustees of the CPT, subject to it obtaining master trust authorisation from TPR. Smart is expected to submit its application to TPR imminently.
The scheme administrator for the CPT has today written to all employers advising them of the position and of the proposal.
With final TPR approval expected during April 2019, it is anticipated new employer and member contributions will be paid to the Smart's auto enrolment master trust (AEMT) from May 2019.
Lighthouse said the scheme assets will be transferred from the CPT to the AEMT by the end of June 2019.
The group expects the wind-up process to take a minimum of six months from the date of the scheme assets being transferred.
Lighthouse will continue to fund the operating costs of CPT during the process, together with the costs of winding-up the CPT once all transfers have been effected.
It added that the impact of the proposed transfer was expected to be broadly cost neutral in 2019, and should provide a small net income stream after associated costs from 2020 onwards.
Dippy Singh is a freelance reporter for FTAdviser