The Pensions Regulator will supervise authorised master trusts with a risk-based strategy which could lead to one-to-one supervision and withdrawal from the market, according to its latest policy document.

The Master trust supervision and enforcement policy October 2018 published today, 1 October, clarified the regulator’s new supervisory regime, which previously placed more weight on the close supervision of new master trusts, but will now operate a “basic level of supervision for all”.

As part of the new approach, TPR laid out five key principles including; being engaged and response to issues facing master trusts; proactive and forward looking; strategic and targeted; proportionate and risk based and consistent in its enforcement.

The policy document said: “We will undertake a range of supervisory activities with master trusts after they are authorised. This will involve engagement with trustees, strategist, and funder as well as any other relevant persons, including the scheme administrator.

“The frequency and intensity of our interactions with master trusts will be driven by the risks and issues associated with them, and we will prioritise resources accordingly when seeking to satisfy ourselves that master trusts continue to meet the authorisation criteria and their wider obligations. Master trusts subject to the most intensive supervision will be assigned a named lead supervisor
(one-to-one supervision).”

All master trusts will be subject to periodic scheme evaluations, proactive monitoring, ad-hoc data submissions, face-to-face meetings and triggering even notifications.

Master trusts who will be subject to one-on-one supervision will be allocated a named supervisor.

In response to its new approach, TPR said that it expects schemes work with it to achieve its goals.

“We expect those responsible for running master trusts to be open, honest and transparent in their interactions with us, responding promptly to information requests, to proactively liaise with us and volunteer information about material developments, risks and issues in their master trust, which may affect the scheme’s ability to continue to meet the authorisation criteria and other obligations,” the document added.

Master trusts now have six months to apply to The Pensions Regulator for authorisation, to meet new standards around holding sufficient financial reserves and robust systems and adequate plans in place to operate in the market.

Around 30 master trusts are exiting or are expected to exit the market as new legislation around the fit and proper running of master trust comes into force today, 1 October 2018.

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