Four trustees of the Salvus Master Trust have been fined by the Pensions Regulator after they failed to invest £1.4m of member contributions over three years.
The delay affected 9,081 members, according to the regulator, and elicited the maximum total fine of £5,000 against the trustees.
The successful administration of a scheme is absolutely core to its success and to the value provided to its members
Richard Butcher, PTL
Salvus' trustees approached the regulator to report the problem in January 2017, explaining that a problem with their manual process for investing contributions had led to £1.4m not being allocated.
The master trust has now rectified the issue in cooperation with the watchdog, developing an automated system for collecting and investing contributions and ensuring that no members are worse off for the delay.
Nicola Parish, the regulator's executive director of frontline regulation, said in a statement: “Pension schemes must collect and invest the contributions made by employers and employees. To have left so much money uninvested for this period of time is clearly unacceptable."
Despite the solutions having been implemented and a penalty notice issued by September last year, the announcement of the fine comes at a difficult time for Salvus, which is owned and run by employee benefit consultancy Goddard Perry.
Applications for authorisation by the regulator opened on October 1, giving master trusts six months to gain approval or exit the market.
"Master trusts have to prove that they meet standards in five areas, including proving that they have adequate systems and processes. We will continue to take tough action against schemes which do not meet their legal duties," Parish added.
Salvus has confirmed that it still plans to seek authorisation. Steve Goddard, founder of the venture, said in a statement: "Since this incident occurred, we have revolutionised our digital operations and automated our processes to make sure that situations such as this cannot re-occur. As soon as we were aware of the systems error which led to the backlog we immediately brought this to [the regulator's] attention, along with a proactive plan that ensured no members have lost out."
Robust admin crucial
Robust administration processes are essential for master trusts, according to PTL managing director and Pensions and Lifetime Savings Association chair Richard Butcher.
"The successful administration of a scheme is absolutely core to its success and to the value provided to its members," he said.
Butcher said the regulator is asking trustees for details of any investigations launched into them in the authorisation process's 'fit and proper' test. However, he hoped and expected that the regulator will not punish trustees where they take their duties seriously and act quickly.
"I would imagine, and I would hope, that the regulator takes a sensible and proportionate approach," he said, explaining that this would take into account "the nature of the historical breach and how it was addressed and remedied".
