While master trusts are a longstanding model for workplace retirement saving, the sector has been completely reshaped by automatic enrolment. Most of the 11 million strong target group for automatic enrolment are now saving in a master trust and master trusts are likely to play an important role in decumulation in the future1.
This makes master trusts systemically important to the success of automatic enrolment and by extension, the future of retirement saving in the UK. For these reasons, the PLSA has strongly supported the authorisation system for master trust pension schemes brought in by the 2017 Pensions Schemes Act. We support the draft regulations proposed by the DWP to bring the authorisation framework into being, with only minor reservations; such as the details of the administration of the fit and proper test.
We see authorisation as providing long term stability for the sector and delivering the protection scheme members expect and deserve.
This new regulatory system will enable people to save into a master trust pension scheme with greater confidence and this will help ensure that automatic enrolment continues to prosper.
Tim Gosling, Policy Lead: DC at the Pensions and Lifetime Savings Association, commented: "The PLSA strongly supports an authorisation system for master trust pension schemes. We see authorisation as providing long term stability for the sector and a precursor to rebuilding trust in pension savings. Along with others in the industry, we campaigned for there to be a new regulatory approach to master trusts. It is heartening to see this become a reality.
"While the draft regulations are an important step forward, there is still more to do. The most important thing at this time is to give schemes greater clarity over what they need to do in order to become authorised. We need a code of practice from the Pensions Regulator that is clear and detailed without being prescriptive. We would recommend the Code of Practice includes worked examples and other techniques that might bring clarity to the application process.
"With only one attempt at authorisation possible, both the regulator and the pensions sector need to do as much as possible to make sure that schemes understand the regulations, and are in the best possible position to become authorised."
Draft Occupational Pension Schemes (Master Trusts) Regulations 2018.
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