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The New Pension Schemes Bill
The new Pension Schemes Bill was published recently, delivering some very sensible new regulations around Master Trust pension schemes, and strengthening some of the existing rules.

A Master Trust pension scheme is quite different from a commercial provider.   A Master Trust as an occupational pension scheme established under trust and managed by a Board of Trustees.  The Trustees have a duty to act in the best interests of their members, i.e. employees and employers.   

Master Trusts that have done exceptionally well in the workplace pensions market, because even the smallest employers are able to share the cost of good governance, they can access top quality investment managers and benefit from low cost administration.  Master Trusts offer great value for employees too.

However, the regulation around Master Trusts leaves room for improvement.  We only recommend Master Trusts who have adopted The Pensions Regulator’s Master Trust Assurance Framework, which provides an independent annual review of the scheme against a defined set of governance and administration criteria agreed by The Pensions Regulator.  But the Framework is only voluntary at present, and only 12 out of a possible 70-80 Master Trust providers have adopted it.  This is a cause for concern.

The Bill will address these concerns.  It will strengthen workplace pension schemes by insisting that Master Trust providers meet higher operating criteria and standards of governance. Master Trusts will need to prove that they are financially sustainable, that they are run by fit and proper persons and they have an adequate continuity strategy. New powers will be given to The Pensions Regulator to intervene where pension schemes are at risk of failing.  

The bill will undoubtedly drive up industry standards and ensure that pension scheme members are better protected.  It will also help to level the playing field between those who have already adopted high standards through the Master Trust Assurance Framework, and those who have not.  High standards of governance and the safety of member’s benefits must be a top priority for The Pensions Regulator, so the bill is welcome news to those both choosing and recommending workplace pensions. 

As an employer, choosing the right pension scheme for your employees is a big responsibility.  If you would like to talk through your circumstances with an auto-enrolment expert, please give us a call on 0800 160 1233.  We’ve got lots of useful information and guidance on our website if you need it: http://www.aefasttrack.com/


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