- Fit and proper: all the people who have a significant role in running the scheme can demonstrate that they meet a standard of honesty, integrity and knowledge appropriate to their role
- Systems and processes: IT systems enable the scheme to run properly and there are robust processes to administer and govern the scheme
- Continuity strategy: there is a plan in place to protect members if something happens that may threaten the existence of the scheme, including how a master trust will be wound up
- Scheme funder: any scheme funder supporting the scheme is a company (or other legal person) and only carries out master trust business
- Financial sustainability, including business plan: the scheme has the financial resources to cover running costs and also the cost of winding up the scheme if it fails, without impacting on m
Following its first update on schemes progression through the new authorisation system on 28 February 2019 and last updated for 31 March, TPR released the following information on the 90 master trusts they were following:
- 3 authorised
- 27 application made
- 10 application extensions issued
- 6 decision not known
- 35 exiting
- 9 exited
Source: TPR
From this we can conclude:
- At least 3 master trust schemes will be in operation in the new landscape
- 30 per cent of schemes hope to be in operation
- 18 per cent of schemes have yet to apply
- 49 per cent of schemes have closed or are closing
With the passing of the deadline of the 31 March, this position will change. That said, we know for definite that nearly half of schemes have decided to shut up shop.
Defaqto data also tells us that three off-the-shelf ‘Own Trust’ propositions have ceased to be available in the last six months.
Perhaps this indicates less of a desire for this type of workplace pension solution?
To summarise, the number of schemes available is reducing.
Those employers in schemes that are closing may well now be looking for advisers to help them avoid issues in the future.
Guaranteed acceptance
One in three schemes guarantees to accept all completed applications that they receive.
This provides great peace of mind for those looking to avoid going through the effort of making an application only for it to be rejected.
Source: Defaqto
It is worth noting that Nest is the only workplace pension scheme legally required to accept all relevant applications.
Target market
Most providers describe their target market, providing useful information that helps advisers to segment the market place quickly.
Some schemes will only accept new employers (those going through auto-enrolment), while others only take on employers with established schemes. That said, many will accept both types of new business.
Where a scheme does not state its target market, further questioning may be prudent.
