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TPR plans to probe multi-employer pension risk

The Pensions Regulator plans to scrutinise multi-employer pension schemes ahead of automatic enrolment due to concerns over durability.

It highlighted the issue in a document published last week which outlined its approach to the regulation of employers and pension schemes ahead of auto-enrolment.

The regulator says it will engage with the industry and the Government to address the specific risks posed by non-insurance provider-based multi-employer schemes which are marketed to non-associated employers.

It says: “This is an attractive segment for new vehicles coming to market to take advantage of the increased money flows into pension saving.

“In the lead-up to the introduction of automatic enrolment, there has been continued growth in the number of providers offering multi-employer schemes for non-associated employers. There is a possibility of market saturation and, in the event that economies of scale are not achieved, there may be an increase in consolidation activity.

“This is an area where we will scrutinise developments. Principle one of the six defined-contribution principles is that schemes are designed to be durable, fair and deliver a good member outcomes.”

Speaking to Money Marketing last month, TPR chief executive Bill Galvin said: “We will be paying specific attention to multi-employer trust-based schemes because we believe there are greater risks in schemes that are marketing themselves to a broad scope of employers because there is no single employer with a keen interest in what trustees are doing.”

Informed Choice managing director Martin Bamford says: “It makes sense for the regulator to look into multi-employer schemes if it has concerns about durability. It is important that anyone offering a pension is going to be there for the long term because pensions by their very nature are long term.”

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