Welpen Pensions has decided to exit the master trust market as the regulatory environment moves towards consolidation, it has revealed.

The decision was made by the board and is a direct response to The Pensions Regulator’s (TPR) authorisation regime, which it believes has made the practice “cost-prohibitive” for many small and medium-sized trusts.

The group said it will continue to support its 1,900 participating employers and 55,000 individual members until thy can be transferred to a new provider. The scheme stopped accepting new entrants on 11 March 2019.

Welpen Pensions chief executive, Bruce Kirton, said: “This has been a very difficult decision. We’ve been around since 1960 and have operated a multi-employer DC scheme since 1988.

“But, over the last six months it has become increasingly clear that the master trust regulatory environment is one that favours much larger scale.

“There is now no meaningful place for a small or even medium-sized specialist business such as Welplan Pensions. This is something we’ve already seen with other smaller providers being acquired by larger ones.”

Evidence of market consolidation became apparent last year, when Salvus Master Trust acquired 1,200 members from Complete Master Trust for £7m.

Since then, Aegon has acquired BlackRock’s DC business, generating assets under management (AUM) of £38bn, and more recently Cardano agreed to acquire 100 per cent of the workplace pension provider Now Pensions, resulting in a total AUM of over £25bn.

Kirton added that the business will continue to build its long-standing employee benefits business.

In December, a report by the Pensions Management Institute found that 87 per cent felt that authorisation would lead to further consolidation, while 60 per cent said that there would be no more than 20 master trusts in five years.

According to its latest figures, TPR received a further nine authorisation applications from schemes since it last published its master trust marker figures in early March, bringing the total number to 22.

Currently, schemes have until 31 March to apply for authorisation, however the regulator revealed that it has granted 11 extensions to date and has urged schemes to apply for an extension if it struggling to meet the deadline.

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