The Pensions Regulator has fined four trustees at Salvus Master Trust for failing to invest contributions of £1.4m promptly.
The regulator said the incident affected 9,081 members and took place for three years; in September 2017 the trustees were fined £5,000, the maximum fine that could be given.
Trustees are required by law to process and invest contributions from employers promptly and accurately. Not doing so breaches Regulation 24 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996. This was TPR’s first penalty issued following such a breach.
Salvus’ trustees reported the problem to TPR, along with a plan to rectify the failure to invest pension contributions and address the historic administration problems which led to the breach.
The master trust worked with TPR to address the problems and make sure all of the affected members were returned to the financial position they would have been in if this error had not occurred.
Commenting, TPR executive director of frontline regulation, Nicola Parish, said: “Pension schemes must collect and invest the contributions made by employers and employees. To have left so much money uninvested for this period of time is clearly unacceptable.
“Our engagement with Salvus has ensured that not only the thousands of members affected have not suffered any detriment, but also the master trust’s systems have been improved to stop this happening again.
“New legislation for master trusts came into force on 1 October which puts safeguards around these schemes to better protect members. Master trusts have to prove that they meet standards in five areas, including proving that they have adequate systems and processes. We will continue to take tough action against schemes which do not meet their legal duties.”
In response, Salvus Master Trust founder Steve Goddard said: “Since this incident occurred we have revolutionised our digital operations and automated our processes to make sure that situations such as this cannot re-occur. As soon as we were aware of the systems error which led to the backlog we immediately brought this to TPR’s attention, along with a proactive plan that ensured no members have lost out. Today our robust online processes ensure that once employers load data into our system, contributions are collected and invested automatically.”
Salvus Master Trust trustee chair Michael Clark said that following the incident, the trustees worked closely with the administrators and Goddard Perry, kept to its plan and regularly updated TPR with progress reports.
The case has been outlined in a report published by the regulator.