The Pensions Regulator is reviewing master trust regulation as a matter of urgency amid increasing concerns around the sustainability of some of the schemes entering the market.
Speaking at the National Association of Pension Funds' annual conference in Manchester, TPR chief executive Lesley Titcomb described the fact so few master trusts had obtained assurance as "frankly disappointing" - and said master trust regulation was currently one of her biggest concerns in the auto-enrolment space.
Titcomb said she was particularly concerned about the sustainability of some master trusts.
"The thing that concerns me is the sustainability issue and there is no financial requirement on master trusts, on solvency or minimum capital levels for example. If they do go out of business it could be quite messy.
"I want to know that if anything happens we can work with them to deal with it in an orderly fashion - to transfer the people affected to other schemes and to help the employers affected."
Titcomb said the issue needed addressing as a matter of urgency. She said: "We are talking to government about this. We have identified it as a gap and feel there is a spectrum of things that could be done."
She said one of the options that she was considering was to ask the government to make master trust assurance compulsory.
"We need to look at master trusts and the regulatory regime that applies to them. They are filling a hugely important role in auto-enrolment, particularly as we get into the small and micro world."
Titcomb said one of the issues was the relative ease with which a master trust could be set up - with the only real hurdle being HM Revenue & Customs registration, which largely focussed on ‘fit and proper' checks.
She said: "I have a rather different set of interests in what those master trusts are doing - are they going to be able to look after the customers assets, administer them well, be a well-governed scheme, are they able, should they not succeed in business for any reason, to wind themselves in an orderly fashion?"
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