30 master trusts exit market as new authorisation rules come into force

Under the legislation, master trusts must have fit and proper people, sufficient financial reserves, robust systems and adequate plans in place to get authorisation and operate in the market. TPR will then supervise schemes to ensure they continue to meet their legal duties.

Existing master trust schemes now have six months to file an application to TPR for authorisation to continue to operate in the market, while new master trusts must be authorised before they open for business.

New figures released today show that, so far, 30 master trusts have exited or are exiting the market, leaving 58 which will either need to apply for authorisation or exit in the coming months.

Nicola Parish, executive director for frontline regulation at TPR, said: "We pushed for extra protections around this market and are pleased that the law has come into force today.

"The success of automatic enrolment has led to rapid growth in master trusts. Authorisation and supervision is vital to ensure 10 million savers can have confidence that their retirement savings are safe.

"We have worked hard to ensure we have been clear about the evidence we require from master trusts to demonstrate they meet the standards laid out in law.

"It is now up to trustees to review the code of practice and guidance, and submit applications through our portal, which opens today."

Kate Smith, head of pensions at Aegon, commented: “This new regulation will drive up standards and make master trusts more financially sound, but most importantly offer greater protection to members. To be authorised master trusts will have to prove they are financially sustainable, have business continuity plans in place and be run by people meeting the regulator’s ‘fit and proper’ test.

"Only authorised master trusts will be allowed to continue to operate and be listed on the Pension Regulator’s website. Already 30 master trusts have decided not to apply for authorisation and have exited or are exiting the market. More will follow as stronger regulation and ongoing supervision bites, potentially cutting the number of schemes in half in a year or so.”