A new Pensions Bill will strengthen master trust regulation and give The Pensions Regulator increased powers to police these schemes.
The measures contained in the new Pensions Bill include capping early exit charges, giving TPR more powers to police master trusts and beefing up protection for savers.
The new Pensions Bill - announced as part of the Queen's Speech - will force master trusts to demonstrate they meet strict new criteria before entering the market and taking money from employers or members.
It will also give greater powers to the regulator to authorise and supervise these schemes and take action when necessary.
Many in the industry have called for better supervision of occupational pensions with auto-enrolment (AE) passing the six million mark and micro-employers starting to stage their workers.
People's Pension director of policy and market engagement Darren Philp (pictured above) said: "AE has been a successful policy so far. One of the gaps in the current regulatory framework has been around master trusts, which has not been fit for purpose. We know TPR has been concerned about powers to regulate master trusts. It is appropriate TPR will be given powers to regulate the sector.
"We also welcome the cap on exit fees as they are not consistent with freedom and choice. It is great the government has listened and master trusts are up on the list of priorities."
TPR chief executive Lesley Titcomb added: "We welcome the announcement today of a new Pensions Bill which proposes to give us new powers to regulate master trust schemes.
"We look forward to working with government over the coming months to develop the strategic application of these proposed new powers to ensure master trusts are strong, durable and well placed to deliver good member outcomes.
"Currently, new master trusts are subject to far less regulatory scrutiny than new contract-based providers and so we have encouraged employers to only choose master trusts which have achieved master trust assurance, or group personal pension plans (GPPs).
"We continue to believe that well run, scaleable and sustainable master trusts, along with GPPs, are a good choice for employers seeking to comply with their automatic enrolment duties."
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