From the blog: Like the proverbial three bears, regulators face criticism if they deviate from carefully calibrated positions. Too ‘hot’ and undue costs could be placed on industry. Too ‘cold’ and consumers' protection can suffer.
Both within our industry and government there appears to be a growing consensus that mastertrust regulation needs to ‘warm up’.
I’ve seen how the Pensions Regulator has named protecting consumers from poorly governed mastertrusts as one of its corporate priorities, and pensions minster Ros Altmann has discussed new regulations to protect mastertrust members.
A vital part of putting the ‘trust’ in mastertrusts is creating and maintaining good regulation that is targeted at, and proportionate to, the risks within the market
We support any moves that mean people can trust their scheme to meet the necessary standards and help them achieve a comfortable retirement.
Rapid change
Pension providers are operating in a rapidly changing environment. Some people have voiced concerns about the new players in the market. While smaller mastertrusts can have a role, we need to ensure all schemes serve their members’ interest – particularly as scale is so important to ensuring a mastertrust’s stability and ability to provide value for money.
Part of this process is to ensure the barriers to entry are set at an appropriate level in the first place. But regulation also needs to reflect this rapidly changing market to ensure existing mastertrusts are operating at the necessary standard.
A focus on governance and independently audited mastertrust assurance status isn’t just a box-ticking exercise for Nest or a cause for self-congratulation – it is important because it builds trust and instils confidence in our members that we’re doing the right thing with their money.
Governance indicators and signposting
As an industry we need to look to how we build and maintain trust in our services. Voluntary governance indicators like the Pension Quality Mark and the mastertrust assurance reports are important guides for employers, though we need to consider whether they should remain voluntary.
Equally, Nest welcomes any initiative to support employers in making the right choice, but smaller employers in particular need clear and accessible resources that clearly signpost good-quality schemes.
For me, a vital part of putting the ‘trust’ in mastertrusts is creating and maintaining good regulation that is targeted at, and proportionate to, the risks within the market.
Effective regulation is a careful balance, but overall an increased focus in this area is welcome. We are confident that the sector can find arrangements that are, like that final bowl of porridge, just right.
Will Sandbrook is executive director of strategy at mastertrust Nest
