Some 20 master trusts will not apply for authorisation with The Pensions Regulator (TPR) by the 1 October deadline to operate in the market, Baroness Peta Buscombe has said.
During a debate at the House of Lords on 18 July, the parliamentary under-secretary of state for work and pensions said the regulator is currently "working closely" with these master trusts, which have already closed, or signalled their intention to leave the market. "They are considered small, legacy, sub-scale and non-core business."
It comes as the watchdog announced earlier this month that master trusts with fewer than 2,000 members will be required to hold at least £150,000 of capital under the authorisation deadline, from the previous £75,000.
The details were revealed in the regulator's response to the consultation on the draft code of practice. This was published this month alongside a final version of the code.
Baroness Buscombe also revealed that TPR has received 33 readiness review applications out of the 81 master trusts currently in the market.
"As a result, it has a good understanding of those schemes that are most likely to close. Where this is the case, it is likely to be because they will not meet the quality standards being introduced, for example, because of poor administration or doubts about long-term financial viability."
The watchdog offered ‘readiness reviews' to allow master trusts to submit draft applications for feedback from May ahead of the authorisation deadline.
It is expected that 40 to 45 formal applications will be submitted by October, "in line with the regulator's expectations", Baroness Buscombe added.
It is expected that "there will continue to be further consolidation of the market as we approach the October deadline".
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