Friday 01 Dec 2017 @ 08:10
Department for Work and Pensions
Printable version

Master trust pension schemes consultation

Master trust pension schemes will need to meet 5 key tests in order to continue operating, under new regulations confirmed by the government yesterday.

An ‘authorisation and supervision regime’ will ensure that tough new powers are in place to protect the 7 million members of master trust schemes, who have a combined £10 billion worth of assets invested. The changes will provide them with equivalent protection to members in other types of pension schemes.

Master trust schemes will be assessed against 5 key tests:

  • persons involved in the master trust scheme are fit and proper
  • that the scheme is financially sustainable
  • that each scheme funder meets specific requirements in order to provide assurance about their financial situation (including through presenting a business strategy and full, audited accounts)
  • the administrative and governance systems/processes used in running the scheme are sufficient
  • the scheme has an adequate continuity strategy

Under these plans, consumer savings will be more secure with master trusts being required to meet strict criteria on all aspects of operations and governance.

Guy Opperman, Minister for Pensions and Financial Inclusion, said:

The majority of master trust pension schemes are operating well, but for too long these schemes have been subject to far less regulatory scrutiny than new contract-based providers.

Nobody’s savings should be less secure simply because of the pension chosen by their employer. That is why the new authorisation and supervision regime is a significant step forward in bringing master trust and other occupational schemes into line.

These strict new tests will ensure current and future master trusts are strong, safe and well placed for consumers and employers to invest their pension contributions.

The new regime will be administered by The Pensions Regulator. Under the new regime all current and prospective master trust schemes will need to apply for authorisation to operate in the market. The regulator will also have greater ongoing powers to work with, and if necessary, de-authorise master trusts where they are at risk of failing.

Master trusts will also have to demonstrate on an ongoing basis that they continue to meet the strict authorisation criteria, including demonstrating provisions to ensure member funds are protected in the event of a scheme needing to be wound up.

The master trust market has grown rapidly since 2012. There are currently 87 master trusts, which now represent 90% of savers who have been automatically enrolled into a workplace pension.

The announcement follows the passing of the Pension Scheme Act in April 2017, which introduced this regime proposal. It is expected that the new regulations will come into effect from October 2018.

Read the public consultation on the draft Occupational Pension Schemes (Master Trusts) Regulations 2018

More information

As a type of multi-employer pension scheme, master trusts have the potential to offer great advantages for members and employers, due to their scale, good governance and value for members.

The vast majority of employers have chosen to use a master trust pension scheme to meet their automatic enrolment obligations rather than set up and run their own workplace pension scheme. This has led to a considerable expansion of the master trust market.

It is estimated that around 11 million workers will either be newly saving or saving more into a workplace pension by 2018, generating around £20 billion in additional pension saving by 2019/20.

Contact Press Office

Press Office

Caxton House
Tothill Street
London
SW1H 9NA

London Press Office (national media and London area enquiries only – not questions about personal claims) 020 3267 5144

Out-of-hours (journalists only) 076 59 108 883

England and Wales (local media enquiries) 029 20 586 then 097 or 098 or 099

Scotland (local media enquiries) 0131 310 1122

Follow DWP on:

 

Channel website: https://www.gov.uk/government/organisations/department-for-work-pensions

Original article link: https://www.gov.uk/government/news/master-trust-pension-schemes-consultation

Share this article

Latest News from
Department for Work and Pensions

Back to work boost as quarter of a million workplace training places delivered

17/04/2024 15:10:00

More than a quarter of a million workplace training places for benefit claimants have been delivered in just three years, new data reveals.

£1.5 Million investment to improve in-work health services as part of government drive to tackle inactivity

15/04/2024 12:10:00

Reforms to occupational health services will be shaped through a £1.5m innovation fund, as the government continues its drive to tackle in work sickness and boost economic activity using new technology and artificial intelligence.

Working parents on Universal Credit set receive up to £20,872 a year in childcare support

10/04/2024 16:20:00

Parents on Universal Credit can now receive up to £1,311 more a year in childcare support following a 6.7% boost coming into effect, as the government’s expansion of free childcare for working parents delivers 150,000 places in a week.

Fraudsters behind £53.9 million benefits scam brought to justice in country’s largest benefit fraud case

10/04/2024 14:15:00

A group who stole over £50 million of taxpayers’ money has been brought to justice in the largest ever benefit fraud case in England and Wales.

Government reaffirms commitment to backing pensioners with £900 rise to state pension

10/04/2024 10:10:10

The State Pension is increasing by 8.5 percent as part of the Government’s commitment to support pensioners in retirement.

Half a million more benefit claimants set to benefit from back to work support as Universal Credit expands

10/04/2024 09:20:00

Half a million people claiming old benefits will be invited to claim Universal Credit, unlocking all the work support it offers.

New guide published to help businesses boost disabled people’s prospects at work

09/04/2024 12:20:00

A new Disability Confident guide for managers helping them recruit, retain, and foster the progression of disabled people and those with health conditions in the workplace has been published today by the Department for Work and Pensions (DWP).

£5 billion in support for energy bills paid this Winter

05/04/2024 15:25:00

An estimated £5 billion in support has been paid throughout Winter to help families with energy costs.

New laws to cut migration and put British workers first in force

05/04/2024 12:12:00

Changes that are now in force will slash migration and prevent the undercutting of British workers by employers looking to recruit cheap labour from overseas.