Master trusts must now apply to The Pensions Regulator for authorisation in an effort to drive up standards in schemes.
Under new legislation every new and existing master trust must show it has fit and proper people, sufficient financial reserves, robust systems and adequate plans in place to get authorisation.
TPR will supervise schemes to make sure they continue to meet their legal duties.
Existing master trusts have six months to apply for authorisation while new master trusts must be authorised before they open for business.
TPR frontline regulation executive director Nicola Parish says: “The success of automatic enrolment has led to rapid growth in master trusts. Authorisation and supervision is vital to ensure 10 million savers can have confidence that their retirement savings are safe.”
Aegon pensions head Kate Smith says: “Already 30 master trusts have decided not to apply for authorisation and have exited or are exiting the market. More will follow as stronger regulation and ongoing supervision bites, potentially cutting the number of schemes in half in a year or so.”