October has seen a new law come into force designed to improve standards in master trust pension schemes that are used by millions of people to save for retirement.
Thanks to the new law, every new and existing master trust will now have to apply to The Pensions Regulator for authorisation and prove how they meet the tough new standards that are designed to increase the safeguards for 10 million members. Master trusts must have:
- Fit and proper people
- Sufficient financial reserves
- Robust practices
- Adequate plans in place to get authorisation and operate in the market
The Pensions Regulator will continually supervise schemes to ensure that their legal duties are met.
Under the new legislation, existing master trust schemes have six months to file an application to The Pensions Regulator for authorisation to continue to operate in the market. New master trusts will have to get authorisation before they open for business.
Nicola Parish Executive Director for Frontline Regulation at TPR, said: "We pushed for extra protections around this market and are pleased that the law has come into force today."
"The success of auto enrolment has led to rapid growth in master trusts. Authorisation and supervision are vital to ensure 10 million savers can have confidence that their retirement savings are safe."
To make sure that master trusts were ready for the new law, The Pensions Regulator has worked closely with providers.
She added: "We have worked hard to ensure we have been clear about the evidence we require from master trusts to demonstrate they meet the standards laid out in law."
"It is now up to trustees to review the code of practice and guidance, and submit applications through our portal, which opens today."