The government will introduce legislation to boost the governance and monitoring of master trusts, according to economic secretary to the Treasury Harriet Baldwin.
In response to concerns raised by MP for Wolverhampton South West Rob Marris in parliament on 23 February, Baldwin said the legislation would be introduced "as soon as practically possible".
Marris asked about the shortage of regulation in place to police the master trust pension schemes entering the market, and the lack of scrutiny they were under.
In response Baldwin (pictured above) said: "I can let him into a little secret on that: the government will bring in legislation on master trusts and on the points he raised as soon as practically possible."
The government felt it was too late in the day to bring in such measures into the current legislative process. "However, we aspire to find very soon the first appropriate vehicle that could be scrutinised by both Chambers to bring in the regulations relating to master trusts and auto-enrolment," she added.
Royal London director of policy and former pensions minister Steve Webb said in response: "It is good news that the government is planning to tighten the rules on the dozens of master trusts that are springing up. Reports of potential conflicts of interest, poor governance and financial instability among small new master trusts are a source of grave concern.
"When workers are automatically enrolled they need to be absolutely confident that their employer has chosen a reputable and financially secure provider. It would hugely damage the reputation of automatic enrolment if workers started to be enrolled into poorly governed schemes.
We look forward to an early announcement of the government's timetable for action, as the risk remains a real one until the rules are tightened."
At a conference in October last year, The Pensions Regulator said it wanted to look into master trusts more closely.
Last month it warned there were real risks from new master trusts being subject to far less regulatory scrutiny than new contract-based providers.
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