Over 1m employers and 10m employees are now using workplace pension schemes.
Opportunities for advisers have been created by the new standards for master trusts and the triennial re-declarations of compliance every employer must complete. We explain these below.
The market
The market is made up of contract schemes, own trusts, and master trusts.
Contract schemes are regulated by the Financial Conduct Authority, while trust based schemes are overseen by The Pensions Regulator.
Different sets of rules for what is, in reality, one consumer outcome can be confusing and makes comparisons across the market difficult.
Looking at the retail workplace pension propositions open to new business, it splits along the following lines: 28 per cent contract, 12 per cent own trust, 60 per cent mast trust (according to Defaqto).
However, this is about to change though. TPR has introduced tougher regulations for master trusts available and it is already understood that some will not meet them.
Master Trusts – the new standard
TPR now requires all master trusts in operation before 1 October 2018 to either pass their new standard or close.
Those wishing to remain in business were required to submit their application, along with a fee of £41,000, before 31 March 2019.
However, ten schemes have received short extensions.
Those who did not submit an application are now going through the closure process and transferring their members to new providers.
Those who submitted an application are now awaiting the monthly TPR update which declares trusts that have passed.
The first of these was published on 20 February, announcing that LifeSight from Willis Towers Watson had passed the assessment and become the first authorised master trust.
So, what is the new standard?
The Pension Schemes Act 2017 and the Occupational Pension Schemes Regulations 2018 have given TPR statutory objectives and new powers to meet them.
This has resulted in a new standard for master trust operators. In essence, master trusts need to be able to demonstrate that their scheme meets the required standards across the following criteria:
