Authorisation was introduced to raise standards for the 14 million members saving into master trusts.
Since 1 October 2018, existing master trusts had until 31 March this year to apply to us for authorisation, demonstrating that they meet the required standards across five areas:
1. Fit and proper – All the people who have a significant role in running the scheme can demonstrate that they meet a standard of honesty, integrity and knowledge appropriate to their role.
2. Systems and processes – IT systems enable the scheme to run properly and there are robust processes to administer and govern the scheme.
3. Continuity strategy – There is a plan in place to protect members if something happens that may threaten the existence of the scheme, including how a master trust would be wound up.
4. Scheme funder – Any scheme funder supporting the scheme is a company (or other legal person) and meets the requirement that it only carries out master trust business.
5. Financial sustainability – The scheme has the financial resources to cover running costs and also the cost of winding up the scheme if it fails, without impacting on members.
New master trusts can apply to enter the market at any time.
They must provide evidence outlining how a scheme will meet the standards in five key areas.
But new schemes will be more intensely supervised than existing schemes because they will not have an operational track record.
A TPR report read: “High intensity supervision will give these new master trusts the opportunity to demonstrate that they continue to meet the authorisation criteria.
“We expected the introduction of authorisation to drive consolidation of the market, and we see evidence of this continuing.”
It added: “For those master trusts that choose to exit the market, or fail to get authorised, we continue to work closely with trustees and associated key people to make sure the exit plans for their scheme are orderly and meet our expectations as part of our role to ensure savers are not put at risk.”
A TPR spokeswoman confirmed that six of the 39 applicant schemes had already been authorised.