The Pensions Regulator welcomed the news last week that its concerns over the regulatory controls for master trust schemes may at last be addressed.
On 30 November the Department for Work and Pensions launched a consultation on the draft regulations for the authorisation and supervision of master trusts under the Pension Schemes Act 2017.
A master trust scheme is defined as an occupational pension scheme that:
- is used by more than one employer;
- provides money purchase pensions (either alone or with other benefits); and
- is not a public sector scheme or used only by connected employers.
As of 1 October 2018 a master trust must be authorised by the Pensions Regulator if it is to operate and authorised master trusts will be subject to ongoing Regulator supervision.
As part of the authorisation process the Regulator must be satisfied that a Master Trust scheme meets the five criteria set out in section 5 of the 2017 Act:
- The persons involved in the scheme are fit and proper persons;
- The scheme is financially sustainable;
- Each scheme funder meets specific requirements;
- The scheme’s systems and processes are sufficient to ensure that it is run effectively; and
- The scheme has an adequate continuity strategy.
