Our master trust powers will be ‘cornerstone’ of DC consolidation

The Pensions Regulator’s (TPR) powers to authorise master trusts will be the “cornerstone” of its drive to consolidate the defined contribution (DC) market according to Andrew Warwick-Thompson.

In a speech at a Pensions Administration Standards Association (PASA) conference on 27 February, the regulator’s executive director said he was concerned the pace of consolidation had slowed over recent years.

According to TPR’s latest scheme return data, there are 34,500 DC schemes in total, of which 32,000 are micro-schemes with between just two to 11 members. 

Warwick-Thompson argued this number is far too high and that master trusts are the correct vehicle to pursue consolidation.  

He said: “The new authorisation and supervisory regime for master trusts will enable us to create a secure and value for money DC savings market, which we see as the natural destination for small schemes.

“Consolidation is ultimately the right answer but we have to get past vested interests. What is important to me is what is good for members and public policy in the long run.”

Any consolidation would have to happen in phases due to the sheer volume of small schemes and require action from the Department for Work and Pensions (DWP), he added.

Warwick-Thompson also revealed more details on TPR’s forthcoming requirement for trustees to report on record-keeping in their scheme returns to raise standards, after finding little improvement.

From 2018 it will be mandatory for scheme returns to include common and conditional data scores. Common data is used to identify members while conditional data is scheme specific data to calculate member benefits.

This will hit the first defined benefit (DB) schemes from January 2018 and the first DC schemes from July 2018.

Warwick-Thompson warned the watchdog would take action against schemes that fail to meet what is required : “Too many trustees do not take administration seriously.

You can expect us to hear from us. In your scheme returns you will be obliged to tell us about the quality of your data. If you disappoint us we will take action against you.”






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