Master trusts feeling the force of tough new regulation are already exiting the market, says The Pensions Regulator, and a number of providers have indicated they would pay to take them on. By Gill Wadsworth
Speaking at the Corporate Adviser Summit today, TPR executive director for regulatory policy, Andrew Warwick-Thompson said the watchdog was already helping some failed trusts through the process.
“We have procedures to deal with voluntary market exits and we are already helping a couple [of master trusts] that have failed.”
Warwick-Thompson said the forthcoming Pensions Bill, which is expected in the next month – possibly later this week, placed stringent demands on master trusts and would force many out of the market.
Praising former pensions minister Baroness Ros Altmann for ‘kickstarting’ the Bill’s progress through parliament, Warwick-Thompson said: “We anticipate that the pensions bill will introduce new requirements and these cover fitness, propriety and integrity. One would expect some early attrition on the existing market and we will be left with a rump of trusts that make it through authorisation.”
Warwick-Thompson said the regulator was working with a handful of master trusts acting as consolidators to absorb the failed entities.
He added that some master trusts had business models designed to ‘hoover up’ trusts that were unable to compete under a tougher regime.
A number of master trusts have come forward to say they would consider taking on failed competitors and pay for the right schemes.
Asked whether her organisation would be prepared to pay cash to a master trust, Jo Kite, managing director of LifeSight the Willis Towers Watson master trust, said she would ‘always be willing’ to talk about consolidation. Asked the same question, representatives from People’s Pension, Aviva and Aegon also indicated they would not rule out buying out competitors looking to exit the market.
The regulator is also working with insurers and master trusts on an initiative to take on orphaned and poorly governed employer schemes.
“We hope that there will be a consolidation of the huge tail of substandard schemes,” said Warwick-Thompson.
