The number of master trusts which have either left or are leaving the market in light of incoming regulations now stands at 21, according to new figures from The Pensions Regulator.
TPR said that three schemes have officially wound up and exited the market, while a further 18 have confirmed they will not be applying for authorisation and have formally started the process of winding up their schemes.
Master trusts who wish to remain running have to apply for authorisation from 1 October 2018, in order to ensure they are “fit and proper”, meeting standards across five key areas including systems and processes, strategy and financial sustainability.
In its monthly update on the process, TPR said: “We expected the introduction of authorisation to drive consolidation of the market, and we have already seen evidence of this happening.
“Three schemes have wound up and a further 18 have decided not to apply for authorisation and are winding up their scheme, transferring their members to an alternative master trust scheme or other appropriate vehicle.”
The regulator added that since January it has identified a further nine schemes, bringing the total in the market to 90, including the 18 that are planning on leaving the market and the three that have already exited.
“The remaining 69 master trust schemes expect to either apply for authorisation or trigger their exit from the market in the coming months. We anticipate more schemes will leave the market before the authorisation window closes in April next year,” it added.
The regulator confirmed that for those who choose to exit or fail to get authorised, it will help oversee the process to ensure members are being transferred safely.
TPR said that it has so far received 33 draft applications from master trusts as part of their voluntary readiness review.
Speaking prior to this latest update, ITS client director Dianne Day, said that there is still uncertainty around how authorisation will be announced, as it could give a competitive advantage to those that are authorised first.
“There is a lot of consultation going on, we have had the readiness review phase and still not quite sure how the authorisation will be announced, will it be all at once or will it be dribbled out?” she said.
“The master trusts who are applying would like a bit more certainty around the process because it can be seen as a competitive advantage to be licensed first and if you are an aardvark master trust you might think alphabetical might work for you.
“For those master trust who have big ambitions and are putting a lot of resources in … they are keen to get going and as a defined contribution scheme thinking about moving across to a master trust in a corporate situation, you kind of a little bit in limbo … There’s a tension, like you are at the beginning of a competitive race.”
Day added that there are schemes who are contemplating the move but are waiting to have clarity on how these master trusts will be organised.
A TPR spokesperson said: “We have a legal obligation to publish a list of authorised master trusts, which we will publish in batches based broadly on when they are filed to us.
“When deciding how to publish this list we have worked hard to ensure we are reasonable and fair.”