A total of 38 master trusts have submitted authorisation applications to the Pensions Regulator before the authorisation window closed on Sunday (May 12).
A total of six master trusts have been granted authorisation to date. These are the BlueSky Pension Scheme, the Crystal Trust, Legal & General WorkSave Mastertrust, Legal & General WorkSave Mastertrust (RAS), LifeSight, and the Universities Superannuation Scheme. There are a further 32 applications being processed.
Master trusts had until March 31 to apply to the TPR for authorisation under rules brought in last October. They were then given a six-week extension to ensure they got their complex applications right.
Out of the 10 schemes granted an extension, eight filed an application, while one scheme no longer meets the definition of a master trust, and another has decided not to apply for authorisation, TPR stated today (May 14).
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 change in legislation has prompted more than half of the 81 master trusts operating in the market in January 2018 to leave, partly because they realised their business could no longer be classed as a master trust, while some others entered.
As of April 30, 44 master trusts decided to exit the market and transferred their members to an alternative master trust scheme or other appropriate vehicle.
Kim Brown, head of master trust authorisation and supervision at TPR, said: "We now have the final number of applications for existing master trusts and we will be continuing to assess these applications over the coming months.
"Once authorised, master trusts will immediately be supervised by us. The supervision of authorised master trusts is vital to ensure the new standards imposed in this market are not only demonstrated to us as part of the application process but also continue to be met in the future.
"Supervision aligns with our new approach to regulating trust-based pension schemes and is an example of how we are working more proactively to tighten our regulatory grip to protect savers."
The authorisation and supervision of master trusts by TPR was introduced in the Pension Schemes Act 2017and Occupational Pension Schemes (Master Trusts) Regulations 2018.
But the government and the regulator have been discussing these new rules since 2016.
A master trust is a multi-employer occupational scheme where each employer has its own division within the master arrangement. They have become a popular solution for employers seeking to fulfill their auto-enrolment obligations in recent years.
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