The People’s Pension – the second largest master trust in the market – has been authorised by the Pensions Regulator, bringing the total number of master trusts authorised under the new regime to 18.
The watchdog announced today that besides the workplace pension scheme, with more than 4m members, the Atlas Master Trust and the Cheviot Pension have also received authorisation.
There are now 18 master trusts that have received green light from the regulator but Nest, the government-backed pension scheme, still isn't among them.
According to Patrick Heath-Lay, chief executive of B&CE, the provider of The People’s Pension, authorisation offers peace of mind for members and employers.
He said: “But at The People’s Pension we know that this is just the beginning – rightly – of much closer ongoing regulation of master trust provision.
“We anticipate further change as the authorisation process beds in, as auto-enrolment continues to grow in importance, and discussions about the regulation of the master trust ‘at retirement’ market develop. Our size and strength mean we are well placed to face the future.”
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.
Under the new registration process, master trusts 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.
New master trusts can apply to enter the market at any time. Nevertheless, new schemes will be more intensely supervised than existing schemes because they will not have an operational track record, the watchdog noted.
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.
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 fulfil their auto-enrolment obligations in recent years.
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