Tighter regulation of master trusts, the removal of barriers to accessing pensions and the restructuring of the delivery of financial guidance to consumers were all included in the Queen’s Speech today.
A new Pensions Bill will see master trusts required to demonstrate that schemes meet strict new criteria before entering the market and taking money from employers or members. The Pensions Regulator will be given greater powers to authorise and supervise master trusts schemes and take action when necessary.
The Bill will tackle early exit charges to ensure that excessive charges do not prevent occupational scheme members from taking advantage of pension freedoms.
It also provides for the creation of a new pensions guidance body that brings together the Pensions Advisory Service, Pension Wise and the pensions services offered by the Money Advice Service.
TPR chief executive Lesley Titcomb says: “We welcome the announcement today of a new Pensions Bill which proposes to give us new powers to regulate master trust schemes.
“We have voiced concerns for some time about the need for stronger legislative standards for master trusts and have worked with government and other regulators to improve levels of protection for members.
“We have been calling for a significantly higher bar regarding authorisation and supervision, and we are pleased that today’s announcement proposes to give us the power to implement these safeguards.
“We look forward to working with government over the coming months to develop the strategic application of these proposed new powers to ensure master trusts are strong, durable and well placed to deliver good member outcomes.
“Currently, new master trusts are subject to far less regulatory scrutiny than new contract-based providers and so we have encouraged employers to only choose master trusts which have achieved master trust assurance, or group personal pension plans (GPPs).
“We continue to believe that well run, scalable and sustainable master trusts, along with GPPs, are a good choice for employers seeking to comply with their automatic enrolment duties.”
Aviva director of corporate benefits Colin Williams says: “The time has come for legislation to control the influx of master trusts. There needs to be more control over who can set them up and the level of financial backing needed before they can start to accept members.
“So much good work has been done in recent years to encourage pension saving, particularly with the introduction of pension freedoms and auto-enrolment. It is essential that we don’t undo this good work by encouraging new to market savings schemes that could be unreliable.
“480,000 SMEs have to set up a workplace pension scheme this year alone. For really small businesses, they will already view this as a challenge, without the extra responsibility of having to double check the claims being made by these new master trust providers.”