Secretary of State for Work and Pensions Stephen Crabb has warned against allowing master trusts to become a "byword for poor practice."
Crabb's comments came as he appeared in front of the Work and Pensions Select Committee hearing this morning. He was responding to a question on whether there was a need to tighten up regulation now to deal with "distinct concerns that in 20 years' time we will have people coming here asking government to do something because a master trust has failed."
Crabb said that "we should not allow ourselves to fall into the trap of allowing master trusts to become a byword for poor practice. There are very good reasons why master trusts can work well for auto-enrolment."
He pointed out that 90% of the market was signed up to the Master trust Assurance Framework (MAF) quality standard.
According to The Pensions Regulator (TPR) there are currently nine providers who have achieved MAF. A TPR spokesperson confirmed that over 90% of scheme members have been auto-enrolled into one of these schemes.
However, the number of providers operating in this market has grown steadily. PP currently lists 54 master trust providers though some suggest there could be many more.
Crabb said: "It is right to highlight there could be problems around the edges of the market and these are issues we are talking to the regulator about and there will be announcements in due course."
He continued: "There is an onus on us to think about what could go wrong in this market."
Many in the industry, including pensions minister Baroness Ros Altmann have called for more robust regulation. In March she told the committee she was pressing colleagues in government for a Pensions Bill.
Crabb would not be drawn into specific details but said he would "encourage members to follow what Her Majesty has to say."
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