The number of applications to register pension schemes with HM Revenue & Customs dropped 23 per cent last year, official figures have shown.
For 2018/19, HMRC received 1,925 applications in total to register new pension schemes compared with 2,486 in the year before, according to government data included in the latest HMRC pension scheme newsletter published on April 30.
Of these, 81 per cent have been registered and HMRC refused registration for about 11 per cent of applications. No decision has yet been made on the remainder, according to the newsletter.
HMRC stated it has seen an 88 per cent decrease in the number of applications to register pension schemes from 2012/13 until now.
This decrease could be the result of HMRC’s new restrictions to register small self administered schemes and the increasing popularity of master trusts, industry figures have said.
From last April HMRC was granted new discretionary powers to de-authorise Ssas schemes that do not have an underlying sponsoring employer.
It also implemented stricter requirements for schemes wishing to register.
Alan Chan, director at IFS Wealth & Pensions, believes the bulk of the reduction in numbers relates to the registration of new Ssas.
He said: "HMRC has introduced a more stringent registration process in the recent years mainly to tackle pension scams so there is now greater onus on members and trustees. This has led to a reduction in overall applications.
"I think we may continue to see a decline in the coming years due to increasing regulation and scrutiny."
Claire Trott, head of pensions strategy at St James’s Place, agreed that the decrease could be due to Ssas registration restrictions but said there may also be other issues causing this decline.
She said: "The increased scrutiny and awareness of the use of pension schemes for scams is likely to at least put some people off trying to establish a scheme for this purpose. It would be difficult to be definitive though."
But Steven Cameron, pensions director at Aegon, suggested the increasing popularity of master trusts could be behind the figures.
He said: "The rise of master trusts is likely to have had an impact in falling applications to register new pension schemes.
"Membership of master trusts has increased from 270,000 in 2012 to nearly 10m in 2018, according to data from the Pensions Regulator, and they are fast becoming the preference of many employers who are moving away from single-employer to multi-employer pension schemes."
Master trusts have also undergone a rule change and now must be authorised to operate by the Pensions Regulator.
Latest figures showed so far five master trusts have been granted authorisation and a further 34 are going through the process, meaning under the new rules the number of master trusts operating in the market more than halved from the 90 that were active back in November.
From October 1, 2018, master trusts had until March 31, 2019 to apply to the TPR for authorisation to demonstrate that they have met required standards.