Master trusts – how we’re working to protect 10 million savers

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In arguably the biggest change to pensions regulation since automatic enrolment was introduced six years ago, from October 2018 master trusts will have to apply to The Pensions Regulator (TPR) for authorisation to operate in the market.

The government has responded to our calls for new laws to better protect the nearly 10 million people saving into master trusts. We are proud of the changes we have helped bring about.

I have recently been appointed as Head of Master Trusts to oversee authorisation and supervision at TPR and am excited to play a part in creating a safe and sustainable market.

The new legislation – the Pension Schemes Act 2017 – will require master trust pension schemes to prove themselves in five key areas, providing evidence that:

  • the people running the master trust are fit and proper
  • systems and processes are robust
  • there is a scheme funder who will be able to financially support the scheme
  • the scheme is financially sustainable with sufficient funds
  • there is a continuity strategy in place which will help protect members’ benefits if certain circumstances occur which put the scheme at risk

If master trusts don’t apply for authorisation they cannot operate in the market, or if when authorised they do not continue to meet the standards, they will have to exit the market.

Now that the Department for Work and Pensions (DWP) has published the responses to the regulation consultation, we intend to publish the draft code for consultation on 27 March and the guidance will follow during the consultation period.

We have been talking to master trusts over the past two years, most recently to find out if they intend to apply for authorisation, and if so when they hope to apply.

If master trusts don’t intend to apply, we have been and will continue to work with them to wind up and exit the market, making sure their members are safely transferred to another master trust and employers using such schemes can continue to fulfil their automatic enrolment duties.

Those running master trusts have generally been open and collaborative throughout this process and most are already working hard to prepare for authorisation.

Our workforce will swell to accommodate the increase in workload to ensure we can assess applications thoroughly. Knowing when schemes plan to apply for authorisation or exit the market also means that we can plan and best manage our resources.

Authorisation is new to us, so we’ve looked at the way other regulators have undertaken similar assessments required for approval or authorisation, spoken to pensions experts and worked with the industry to formulate our approach.

We have also listened very carefully to the industry to make sure our forthcoming code of practice, supporting guidance and the authorisation process itself are all clear and workable. We recognise that this is a diverse market made up of a variety of types of schemes and authorisation needs to encompass all master trusts.

Our code and guidance will provide clarity on some commonly asked questions, including how to identify the people who hold key roles, like strategists, and guidance on how to produce the business plan.

In the coming months all master trusts will need to pay close attention to the code and consider applying for a readiness review, which is the opportunity for a scheme to file a draft application for certain areas, to help prepare for authorisation. We encourage master trusts to apply for a readiness review as it will be the best preparation for their authorisation application.

These voluntary draft applications can be submitted to us from May. We will aim to give feedback by 31 August on the quality of their evidence and any areas that need to be improved. It will not be an indication about the likely success of an application – that will be a decision made by the Determinations Panel on authorisation applications.

Readiness reviews will provide applicants with clarity about the quality of evidence needed for authorisation so they are better prepared to submit an application when the formal window opens from October.

In September we plan to share general lessons that have been learnt across the market from these draft applications, to support every master trust in their application for authorisation and to ensure this important new legislation delivers the safe and sustainable master trusts market we need.


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By Kim Brown
Head of Master Trust Authorisation and Supervision