Members of master trusts will see greater protection as new rules for an authorisation regime and capital adequacy have been signed into law.
After months of debate, the Pension Schemes Bill passed the final hurdle of Royal Assent on 27 April, banning member-borne commission payments and capping early exit charges at 1% for existing schemes.
The Pension Schemes Act 2017 also narrows the way trustees can wind up their schemes while giving The Pensions Regulator (TPR) authorisation and greater intervention powers.
There had been some concern that the legislation would not receive Royal Assent ahead of parliament's dissolution on 3 May because of the short time frame granted by the announcement of the snap general election on 18 April.
The law comes after five years of auto-enrolment (AE), during which 70 master trusts have been set up, according to data from TPR. Some of these schemes may not pass the new authorisation regime and may be forced to shut down or merge with other master trusts.
Over seven million people are now members of master trusts - including 6.9 million in those primarily used for AE - with around £10bn of assets invested.
Aegon head of pensions Kate Smith said the bill would improve governance and member protection.
"Thankfully, the Pension Schemes Bill has managed to edge its way to Royal Assent before parliament is dissolved in the run-up to the general election," she said. "Most master trusts are well run, but unfortunately a small minority aren't.
"This is a significant piece of pensions legislation, which will have a halo effect for the pension industry. The new Pension Scheme Act will raise governance and capital adequacy standards so that they are more in line with master trusts run by firms regulated by the Prudential Regulation Authority and Financial Conduct Authority .
"This increased protection should give members greater security and confidence that their pensions are safe."
Hargreaves Lansdown senior pension analyst Nathan Long also welcomed the legislation, but said savers should be able to choose their pension provider.
"The rubber-stamping of this legislation is a solid step forward in bringing master trusts and other occupational schemes more in line," he said. "Nobody should be less well-protected simply because of the pension chosen by their employer.
"In fact, we would like to see the next government build on this by allowing employees choice over the provider to which their employer pension contributions are paid. Doing so would prevent the endless merry-go-round of having to change the home for your retirement savings just because you have changed jobs."
However, the act has been criticised as lacking in detail by Labour, as much of it relies on draft regulations which will not be laid until summer next year, after a period of consultation with the industry later this year.
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