The Pensions Regulator (TPR) has launched a consultation on the proposed authorisation process for master trust pension schemes.
The consultation, which will run until 8 May 2018, seeks feedback on the draft code of practice that is to be implemented for master trust schemes from 1 October 2018. The code of practice details how master trusts will be expected to meet new authorisation criteria and explains what they will need to evidence in order to gain TPR’s authorisation and continue to operate in the pensions market.
In the code of practice it outlines that there are five areas that master trusts will have to evidence. These include fit and proper persons, financial sustainability, scheme funder, systems and processes and continuity strategy. The proposed code gives more information on how master trust schemes can prove they meet these objectives.
The consultation also aims to gather views on the related procedure TPR will follow regarding awarding master trust authorisation.
TPR plans to publish separate guidance to accompany the code of practice and new regime. The consultation will additionally collect feedback on what this guidance should include.
The master trust authorisation process will be effective from 1 October 2018 and existing schemes will have six months from the implementation date to apply to TPR for authorisation.
Anthony Raymond, acting director of regulatory policy at TPR, said: “As the master trust market grew we had concerns about the lack of regulation for these schemes and so we lobbied the government for stricter rules.
“The publication of our code of practice marks another important step towards establishing a market with stronger safeguards and which pension savers can have confidence in. We are being clear about our expectations of master trusts and will not authorise schemes which fail to meet the necessary standards, both in applications for authorisation and during supervision.
“If an existing master trust chooses not to apply for authorisation or does not meet the authorisation criteria it will have to wind up and exit the market. New master trust schemes have to be authorised before they can begin to operate in the market.”