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Govt toughens master trust regulations in new Pensions Bill

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Master trusts will have to prove they are financially sustainable under tougher new rules published by the government today.

The Pension Schemes Bill also confirms The Pensions Regulator will be given new powers to intervene where a master trust –  a multi-employer scheme designed for auto-enrolment – is at risk of failing.

The Bill sets out five criteria master trusts will have to meet: the scheme must be financially sustainable, those involved in the scheme must be fit and proper, the scheme funder must meet certain requirements to give assurance about its financial situation, the scheme must have adequate governance and administration processes, and the scheme must have an adequate “continuity strategy”.

Pensions minister Richard Harrington says: “We want to make sure that people saving into master trusts enjoy the same protection as everyone else, which is why we are levelling-up that protection, to give these savers more confidence in their pension schemes.”

The Bill also begins the process of introducing a cap on early exit charges for occupational pension scheme members wanting to access their savings.

It does not set down a precise cap at this stage, however.

TPR chief executive Lesley Titcomb says: “We are very pleased that the Pension Scheme Bill will drive up standards and give us tough new supervisory powers to authorise and de-authorise master trusts according to strict criteria, ensuring members are better protected and ultimately receive the benefits they expect.”

The Bill was announced following the Queen’s Speech in May.

The People’s Pension policy and market engagement director Darren Philp says: “Millions of people are now saving into master trusts, and as auto-enrolment continues these numbers will only continue to grow. There are a lot of schemes in the market now, and it would be unrealistic to think they will all survive. There is now likely to be a period of market consolidation – and savers need to have their assets protected while this takes place.”

He adds: “We need quality standards to be met before players can operate in the market, including proper scrutiny of the people who run schemes. Most importantly, we need to make sure that savers do not see their pension pots damaged by covering the cost of collapsing schemes – or, worst of all, lose their savings entirely.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. To quote Richard Harrington…. “We want to make sure that people saving into master trusts enjoy the same protection as everyone else, which is why we are levelling-up that protection, to give these savers more confidence in their pension schemes.” Sounds good to me, it’s just a pity the frozen 4% are not being given ‘the same protection as everyone else’ when it comes to the state pension seeing as they have paid for their pension under the same terms as everyone else.

  2. My comment made previously has somehow disappeared and so here it is again.
    Pensions minister Richard Harrington says: “We want to make sure that people saving into master trusts enjoy the same protection as everyone else, which is why we are levelling-up that protection, to give these savers more confidence in their pension schemes.”
    When does he propose to level up the state pension protection and stop discrimination of a minority of just 4% of all state pensioners ? Paying the annual uprating to 96% of all pensioners worldwide while blatantly denying the remaining 4% is discrimination at it’s worst when all pensioners have clearly paid similar contributions under the self same conditions but in retirement this minority are excluded from any indexation without any valid reason or justification. It is immoral , divisive and undemocratic and must be abandoned now.
    Comments like mine have been made for years with nobody of influence taking up our cause and pressing for equality for us yet LGBT and mixed marriages get all of the attention and whilst I am not against their rights, surely the frozen pensioners also deserve to be given equal consideration.
    It would be interesting to hear the answer given should moneymarketing ask the question as to the relevance of section 20 in the Pensions Act and how it fits with the Code of Conduct of Members of Parliament and determines whether a pensioner can or cannot receive the annual uprating dependent purely on the country that they live in.
    See No 5 here : http://www.publications.parliament.uk/pa/cm201012/cmcode
    /1885/188502.htm#a1
    And section 20 if Pension Act here : http://www.legislation.gov.uk/ukpga/2014/19/section/20/enacted
    It is to be noted that there is no requirement for any agreement with a country to enable a pensioner to receive the fully indexed pension before section 20 is applied.

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