Master Trusts
“The Government has said there will be ‘strict new criteria’ for Master Trusts. It has not yet set out what these will be but it is better to get the details right than to publish them early.
“One key aim may be to remove fears that members’ funds could be used to meet the costs of winding up an insolvent Master Trust and transferring members’ savings to a new provider. This is a particular concern where the Master Trust is not supported by a profitable enterprise with diverse lines of business and a reputation to protect. Making Master Trusts hold money in reserve to cover any wind-up costs would be one solution – though capital costs may affect what providers need to charge members in the normal course of events.
“The Government could also consider making all Master Trusts comply with the governance and administration standards set out in the Master Trust Assurance Framework. The enhanced role for the regulator to ‘authorise’ schemes looks like a licencing regime for multi-employer pension schemes.
“We’ll wait to see the details, but support the intention: raising the minimum requirements for entry into the master trust market is of paramount importance if we are to develop a reputable and trustworthy industry that employees and savers can be confident in.”
The Pensions Bill may not have merited a mention in the Queen’s speech – but watch it evolve
“The pension measures announced today did not merit a mention in the Queen’s Speech itself. But Bills can be amended after being introduced, so the final legislation could be much more wide-ranging.
“By the time the Bill reaches the statute book, it might contain measures to bring forward when the State Pension Age will rise to 68 following John Cridland’s Review. The Bill could also be a vehicle for anything else that the Government decides it wants to do in the pensions space – from changes to how defined benefit pensions are regulated to outside chances such as automatic enrolment into Lifetime ISAs.”
Lifetime Savings Bill
“No new details of the Lifetime ISA were announced today – we should get these in the autumn.
“Some employers will want to facilitate access to LISAs: employees may find it easier to save money directly out of their paycheque, before they have chance to spend it, and employers may be able to negotiate better deals than individuals could do themselves. For other employers, the challenge will be to communicate how the benefits of workplace pensions stack up against
Lifetime ISAs.
“Generally speaking, Government policy still provides stronger incentives to save for retirement through a pension, at least where the money is paid in by an employer directly rather than given to the employee as salary that they can save themselves – though the Chancellor may not be finished with changes to how pensions are taxed. Of course, you can only use a pension towards the cost of a first home if you’re not planning to buy until your late 50s...”
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