Only eight of the 52 workplace schemes in line for master trust authorisation have applied to be authorised thus far, with the deadline approaching fast.
According to an update published by The Pensions Regulator (TPR) this week, 44 more master trust schemes are expected to either apply for authorisation or trigger their exit from the market in the coming months.
From the 90 master trusts identified in the market, seven schemes have exited so far.
A further 31 have notified the watchdog of a triggering event to exit the market and will transfer their members to an alternative master trust scheme or other appropriate vehicle before exiting.
Master trusts have until the end of March 2019 to apply for authorisation with the regulator.
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 rules since 2016 and have been expecting them to drive consolidation in the market.
In its update TPR stated authorisation would "increase the quality of master trust products and providers, and therefore increase protection for members".
For those master trusts that choose to exit the market, or fail to get authorised, the regulator will oversee the process to satisfy itself that "members are transferred in a safe and timely manner and employers continue to meet their auto-enrolment duties – taking enforcement action if necessary.
"We continue to support the 38 schemes that have exited, or plan to exit the market," the watchdog concluded.
Sharon Bellingham, senior consultant Hymans Robertson, expected to see a flurry of authorisations towards the end of the period.
She said there was a concern last summer, ahead of the authorisation window opening, that master trust providers would rush to submit applications and a subsequent warning from the regulator has seen firms reconsider their approach.
She said: "The driver for an initial stampede was the perceived commercial advantage that an early application might provide.
"The message from TPR was, however, loud and clear – don’t be the first to fail and be sure to take time, applications must be robust, thorough and detailed. Consequently the early rush didn’t materialise and we can see that time is indeed being taken.
"Given the extensive scale of the requirements, that time is very much needed. So, with the March 31 deadline rapidly approaching and only seven weeks remaining, it is likely that for some, it is going to now be a dash to the finish line."
maria.espadinha@ft.com
