Pensions Regulator  

Regulator ready for last minute master trust rush

Regulator ready for last minute master trust rush

The Pensions Regulator is ready for rush in master trusts applying for authorisation, as 44 schemes need to either apply or leave the market before the end of March.

Speaking at the Pensions Administration Standards Association annual administration conference 2019 yesterday (February 27) in London, Kim Brown, head of master trust authorisation and supervision at TPR, said the watchdog had always planned for the potential scenario of a rush to applications.

She said: "Initially the industry thought that there would be quite an early peak, but we've learned even from the beginning from our colleagues in other regulators, for example the Financial Conduct Authority, and we have a contingency plan for a potential last minute spike."

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FTAdviser reported earlier this month that only eight of the 52 workplace schemes in line for master trust authorisation have applied to be authorised thus far.

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.

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.

Ms Brown said it was inevitable for consolidation to occur in this market, as raising standards would have that effect.

She added: "What we have seen is a really healthy consolidation market, with a lot of very mature master trusts interested in taking on other businesses.

"We have seen no evidence of master trusts choosing to exit but not finding a scheme that is interested in taking on those members."

Ms Brown noted the regulator had no set target regarding the number of schemes it wants in the market.

"What is relevant is that however many schemes remain, all meet that authorisation criteria," she added.

TPR last week authorised the first master trust under the new regime.

LifeSight, Willis Towers Watson's defined contribution multi-employer pension trust – with 75,000 members and £2.5bn in assets under management - was the first to apply for authorisation, which has now been granted.

maria.espadinha@ft.com