As the deadline for master trusts to apply for authorisation expires, pensions and financial inclusion minister Guy Opperman says similar regimes could be used to ensure that other schemes meet the standards that savers deserve.
Some 2.8m more people earning between £10,000 and £20,000 are saving, some for the first time. And 1.9m more 22 to 29-year-olds are putting money away for their futures, building habits that I hope will last a lifetime.
These statistics are truly extraordinary, and behind every number is a person whose pension prospects are on the up. That fills me with great pride.
Master trust authorisation can also act as a precedent for other areas. I have already announced that collective defined contribution schemes will be authorised by the Pensions Regulator
Master trust pension schemes have played a central role helping thousands of employers to meet their new AE duties. More than 90 per cent of those brought into workplace pensions saving through AE were enrolled in a master trust scheme.
Membership of master trusts has increased rapidly and exponentially, to almost 14m at the end of 2018 from 270,000 in 2012. This has made it absolutely critical for appropriate protections to be in place for members, and to ensure that master trusts continue to provide the best possible service and value to all their members. That is why this government has set a high threshold for schemes to operate in this market.
Time to ratchet up standards
Yesterday we marked the deadline for master trust schemes to apply for authorisation. From this point on, subject to any discretionary extensions, all master trust pension schemes will have to meet five authorisation criteria.
This ensures that schemes are run by the right people, are well governed and are financially sustainable, while also making sure they can protect members’ savings if they decide to wind up.
The Pensions Regulator will implement this rigorous new regime and make sure only schemes that continue to meet these high standards can remain in the market.
I am clear the least anyone should expect is that their hard-earned savings are protected. Confidence that your money is secure and is being overseen by the right people is a huge weight off. This new regime will protect and reassure millions of people.
Focus shifts to wider pensions sector
Master trust authorisation can also act as a precedent for other areas. I have already announced that collective defined contribution schemes will be authorised by TPR and that, while the CDC regime will be bespoke, we will learn from this master trust approach.
AE has brought millions of people into pension savings. Master trust authorisation will ensure that individuals can have confidence that their pension scheme is well governed and their savings are secure.
This is why today is an important step in building the best country in the world to grow old.
Guy Opperman is minister for pensions and financial inclusion
