Initial responses to The Pensions Regulator's (TPR) consultation on how master trusts will be supervised says it lacks detail on some of its policy proposals, including pause orders.
Its Master trust supervision and enforcement policy consultation, which closed on 23 August, outlines how TPR plans to supervise all schemes as well as more intensively scrutinise higher risk master trusts from 1 October. Firms have been responding to the consultation since it launched on 26 July.
Sackers' response noted that more detail is needed from TPR to explain its process in relation to pause orders. These are directions given to a scheme to limit the range of activity that a scheme can pursue. "For example, which persons would decide whether an order should be issued, and what the decision-making process will involve? It is also unclear whether there is any scope to appeal such an order," said Sackers' response.
Now Pensions also expressed concerns that the implications of a pause order have not been fully thought through. "If a master trust is prevented from accepting future contributions, then this could result in the organisation very swiftly going out of business. It would be extremely disruptive for employers and employees, who need a continuity of service."
The provider further argued it is not clear how warning notices would be issued to master trusts - which the regulator proposes would be issued when it wishes to withdraw an authorisation.
The watchdog's consultation document notes the issue of the warning notice will constitute a triggering event and once the withdrawal decision and any appeals are finalised, the trustees will be required to transfer out any remaining members in accordance with the legislative requirements and wind up the scheme.
Now Pensions' response outlined: "We understand from the Pension Schemes Act 2017 that when the triggering event occurs is the date on which the warning notice is issued, but if it sent by second class post to the trustees, the chair of trustees is away sick or on holiday, or if it is simply lost in transmission then several days could elapse when, for example, new employers could be signing up and putting even more people at risk.
"We suggest that the procedure for issuing a warning notice should include some pretty immediate form of communication and acknowledgement of receipt from the offending master trust."
Its section on enforcement - which includes withdrawing master trusts was also criticised by The People's Pension in the section on ‘aggravating factors' on which the regulator will withdraw a master trust if it breaches pensions legislation.
It will also withdraw if it deems a master trust no longer satisfies that it continues to meet the authorisation criteria or its wider obligations.
It noted that it would be useful for the document to have an explanation of what it means by "circumstances of the wider market as a whole" accompanied with examples.
Interactions with master trusts
Now Pensions and Sackers both noted in their consultation responses that a record should be kept by TPR for interactions it has with master trusts. The proposals outline that the regulator will be interacting with master trusts using media including face-to-face and telephone interviews.
In its response, Sackers said there should be a policy for agreeing what records should be kept by the regulator and master trusts. Now Pensions stated that it would be a "matter of good practice" for the regulator to provide a written record of the main points of what was said shortly after every meeting, so that the master trust has the opportunity to correct any misunderstandings.
Last month, the government revealed it expects some 40 to 45 master trusts to apply for authorisation in October, while 20 are expected to not apply for authorisation.
This follows an announcement earlier in the month that master trusts with fewer than 2,000 members will be required to hold at least £150,000 of capital under the authorisation deadline, from the previous £75,000.
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