The government-backed workplace pension scheme National Employment Savings Trust has received a £2,000 fine from the regulator for not complying with the so-called chair statement requirements.
FTAdviser understands that the penalty, which was imposed by The Pensions Regulator in the second quarter of 2019, is related to the higher scrutiny the watchdog has been applying to master trusts as they applied for authorisation.
Standard Life and Mercer received similar fines – the former has two master trusts, so it received two penalties of £2,000 -, according to information published on TPR’s website yesterday (August 22).
The chair’s statement is the document in which the defined contribution scheme trustees explain the actions they have taken to comply with certain obligations.
It must include information on the scheme’s default fund and its governance, the costs and charges applied, and the assessment of value for members, among other topics.
FTAdviser understands that Nest, which administers 8m pension pots, was fined by TPR because the chair statement didn’t include a hyperlink to its statement of investment principles – the link was written out instead - and due to the fact that the information given on the review of the scheme’s default investments, conducted during the year, was considered insufficient.
Dan Davis, Nest’s chief risk officer, said: “We’ve accepted this decision – it’s the role of the regulator to be scrutinising these types of details and ensuring all pension schemes are compliant.
“It’s great to see TPR has since updated their guidance to reduce uncertainty around how they interpret these specific regulations.”
A spokesperson for Mercer, which has already received authorisation for its master trust, said: “TPR has issued a penalty notice relating to the annual statement for the Mercer Master Trust for the year ending 31 March 2018.
“Both the trustees of the Mercer Master Trust [BESTrustees] and Mercer have accepted the fine from TPR.
“Whilst the trustees are non-affiliated and independent and there are procedures to review this on a regular basis, this information was not fully set out in the annual statement.”
A Standard Life spokesperson said: "The trustee always aims to provide full, clear and legally compliant information to members. We regret some minor technical breaches in our 2017 annual statement, which have been corrected in our 2018 statement."
According to Nathan Long, senior analyst at Hargreaves Lansdown, raising the standards of master trusts is a necessary step in ensuring members of workplace pensions are adequately protected.
He said: “You’d expect a new regime to bring some teething issues even for huge, well run master trusts like Nest that have been so instrumental in imbedding auto-enrolment in workplaces across the country.”
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