On the go: Master trusts have been slow off the mark to obtain authorisation from the Pensions Regulator. They have a six-month window from 1 October to gain approval. Since then only one master trust has applied.
In a tweet from @CMS_UK_Pensions the law firm comments that the slow start “is unsurprising given the highly-involved application process and the 31 March 2019 deadline.”
Master trusts have to meet the Pensions Regulator’s required standards across five key areas.
All the people who have a significant role in running the scheme must demonstrate to the regulator that they meet a standard of honesty, integrity and knowledge appropriate to their role; that IT systems enable the scheme to run properly and there are robust processes to administer and govern the scheme.
They also have to show that there is a plan in place to protect members if something happens that may threaten the existence of the scheme, including how a master trust will be wound up.
Any scheme funder supporting the scheme must be a company (or other legal person) and meet the requirement that it only carries out master trust business.
The scheme must show that it has the financial resources to cover running costs and also the cost of winding up the scheme if it fails, without impacting on members.
The regulator has identified 90 master trusts. Three schemes have wound up so far, and a further 33 have decided not to apply for authorisation and are winding up their scheme, transferring their members to an alternative master trust scheme or other appropriate vehicle.
The pensions watchdog expects the remaining 53 master trust schemes to either apply for authorisation or trigger their exit from the market in the coming months.
It anticipates more schemes will choose to leave the market before the authorisation window closes on 31 March next year.
