Pensions  

Final tally on master trusts as authorisations complete

Final tally on master trusts as authorisations complete

More than a year after applications first opened, the Pensions Regulator has authorised the last master trust bringing the final number to 37.

The regulator completed its master trust authorisation process yesterday (November 5), with the FCA Pension Plan and the Salvus Master Trust being the last two schemes registered.

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.

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.

From October 1, 2018, existing master trusts had until March 31, 2019 to apply to the TPR for authorisation to demonstrate that they have met required standards.

The change in legislation 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.

There are now 37 authorised master trusts in the market, with 53 schemes leaving the market since the authorisation process started.

In addition the TPR has received an application from a new master trust and has started the assessment process, while the application for another existing scheme was withdrawn.

As part of the TPR’s supervision all master trusts will have to submit documents regularly, including an annual supervisory return. 

TPR will run periodic scheme evaluations against the authorisation criteria and closely monitor the market, it has pledged.

Before a new master set can be set up, under the new rules, it will have to be authorised by TPR.

Once it has received authorisation it will be closely monitored by the regulator in the first few years of business to ensure it complies with the law.

Nicola Parish, executive director of frontline regulation at TPR, said: “These tough new requirements better protect the 16m pension pots in master trust schemes, which people will rely on in their retirements.

“More than 50 schemes leaving the market shows that these laws are demanding – and rightly so. It is right that people saving for their retirement should be in a scheme which adequately protects their pension pots and which they can have confidence in.

“The 37 authorised master trust schemes will continue to be closely supervised by us to make sure they continue to operate within the law.

“We will also expect them to set an example for the rest of the pensions industry – to have their data in shape ready for the Pensions Dashboards, to be at the forefront of considering climate change in their investments and ensuring that savers are getting value from their pensions.”     

amy.austin@ft.com

What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know