The Pensions Regulator is holding meetings with master trust pension schemes as a way to gauge interest in the number of schemes that intend to apply for authorisation.

Speaking to Pensions Age, Willis Towers Watson, Lifesight head of proposition development, David Bird, said that every master trust has got an appointment with the regulator, and top of the agenda is whether the scheme will be applying for authorisation.

This he believes is to gauge how many schemes in total will be applying so as to decide how much resources it needs to be able to carry out the work of processing the applications.

The People’s Pension head of policy Darren Philp, which also has a meeting arranged, said he thinks the meetings are part of their “initial engagement” when it comes to understanding whether schemes want to go for authorisation or not.

Other questions facing master trusts by the regulator include how ready they are to apply, and what thinking has been done about how they will meet the requirements, Bird said.

The regulator itself told Pensions Age it has been “proactively engaging” with schemes to understand the market, schemes’ intentions around authorisation as well as to “review the financial standing and the governance and administration processes of schemes to guide them about authorisation”.

“Our goal is to ensure those responsible for running and governing master trusts understand the requirements and are ready to apply for authorisation, which is expected from October 2018. Master trusts which do not apply for authorisation will have to exit the market,” it said.

Although the regulator itself said it was not “prepared to speculate” on the number of schemes that are planning on applying, estimations by the Department for Work and Pensions have predicted there will be 57 master trust schemes in the market after authorisation.

The regulator has said it will publish a code of practice for consultation early next year on how authorisation will work and how the criteria should be met. However, it believes that now the regulations have been published by DWP, schemes have more clarity about what they will need to do to achieve authorisation.

Despite this, Bird has said that due to the lack of detailed guidance, there will be questions put back to the regulator in their meetings. “One of the things for us, is thinking through the structure that we use to provide the capital adequacy. At the moment, as a regulated company under the Financial Conduct Authority, and many of the participants are, we hold capital anyway but we hold it in a form, which is different to the regime, so it is a question of how we fill that together,” he said.

“They’re asking questions about how we envisage doing that but we’ll be asking questions back, on what they want us to do.

In addition, Philp said there’s lots of information that schemes are still waiting for but he thinks these initial conversations are around strategic intent, and “I think that’s the vain in which the regulator is approaching the conversations”.

“There are lots of questions, such as, to what extent master trust assurance will help you get authorisation, and if you have to go over and above that, and do you need to get independent verification of what you say,” he said.

Philp added that he has been at a number of events where the regulator has said they are not going to come in and “kick the tyres of the scheme”, they are going to look at your application and its up to schemes to convince the regulator that they’ve got the right systems in place.

“The other big issue, is what capital is the regulator expecting you to hold? I think what the regulation actually does, it set out, in lot more detail than the act, what TPR must take into account, but I think that is going to be the key determining factor as we move into the next stage,” Philp said.

When asked about whether it will be able to give more guidance or capital requirements before issuing its code of practice, the regulator said it will “continue to work with industry to help determine how the financial sustainability requirements in the Pensions Scheme Act should be met”.

“We recognise that there is a diverse market that we need to consider,” it said.

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