Master trusts that have decided not to apply for authorisation must inform members “as soon as possible” in order to avoid panic, it has been suggested.
Barnett Waddingham senior consultant Malcolm Mclean has said that The Pensions Regulator should be telling trusts to inform their members “exactly what they are planning to do about transferring their members over”.
His comments were made after Hymans Robertson suggested TPR should reveal, in a measured way, which master trust have decided to not apply for authorisation so that “the consumer feels protected”, however McLean argues trusts should be informing members themselves, rather than making the list public.
He said: “Who's it going to help by publishing this list?
“I think at some point it might be helpful, perhaps at the end of the exercise, to put out the names of all the schemes that have failed to meet the criteria, but I don’t think they should cause panic and consternation among the members of these schemes.”
“It’s up to the trusts to get the ball rolling on these issues and I expect that’s what the regulator is telling them what to do.”
According to TPR, schemes have 14 days to tell employers they will no longer be a provider and 28 days to inform the regulator of their exit strategy. Once TPR has approved the strategy, the trust then has 14 days to contact members to tell them their rights.
However, according to the Hymans Robertson senior consultant Sharon Bellingham, it is “undeniably important” to understand who is exiting so the consumer is “informed throughout this process without causing any undue or unnecessary fears”.
“Whilst it is undeniably important to understand which providers will indeed be exiting the market, it is also just as important that this information is shared at the right time.
“That right time is likely to vary from provider to provider once a clear solution and plan of action has been put in place. It is vital that the consumer feels protected and informed throughout this process without causing any undue or unnecessary fears.”
Bellingham added that the “rumour mill will no doubt go into overdrive” and therefore a “calm sense of perspective” is needed for members to retain confidence in their providers.
Despite this, it is clear that there are still issues surrounding the transferring of members between master trusts.
CMS partner, Keith Webster, said: “There are lots of difficulties in the transition regime about how you move members from one scheme to another scheme, even if you want to do it for perfectly good reasons, the tax legislation makes it hard. The process of moving members can be quite expensive and that is proving to be difficult.”
Furthermore, publication of the list could give remaining schemes an idea of who is available to consolidate, while McClean says that’s fine in practice, it is not the regulator’s job to “feed them information for commercial purposes”.
Bellingham added that this could be avoided by "naming an alternative receiving provider" when announcing the master trust.
Around 30 master trusts are exiting or are expected to exit the market as new legislation around the fit and proper running of master trusts came into force on Monday, 1 October.
A TPR spokesperson added: “We are not naming master trusts which are exiting the market, or those that are intending to apply.
“We will publish a list of authorised master trusts on our website in due course.”