Over a quarter of master trusts confirmed to close

At least 24 of the 89 master trusts are expected to quit the market when the new authorisation requirements come into force, according to The Pensions Regulator (TPR).

Of the 24, three schemes have already wound up or exited the market and 21 have triggered their exit.

This represents an increase of three from last month’s report, which found that 21 master trusts decided that they would not seek authorisation.

A total of 33 schemes took part in TPR’s voluntary readiness reviews, which allowed them to trial their applications before the changes come into force.

In its monthly update on the process, TPR said: “Authorisation will increase the quality of master trust products and providers and therefore increase protection for members.”

The new requirements will take effect in just under a month, with all master trusts that meet the requirements having to either apply or exit the market by the end of March 2019. TPR will let the schemes know if they have been authorised within six months of their application.

At least 24 master trusts will not apply for authorisation and will leave the market, transferring their assets and member to a different provider.

TPR continued: “For those master trusts that choose to exit the market, or fail to get authorised, we will oversee the process to satisfy ourselves that members are being transferred in a safe and timely manner and employers continue to meet their AE duties – taking enforcement action if necessary. We have already supported the 24 schemes that have exited, or plan to exit the market.”

Under the new guidelines, master trusts will only get one chance at gaining authorisation, although there will be some exceptions for missing information or minor changes as an early stage and there will be an option for appeal.

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