ITM’s response to the Pensions Minister’s Pensions Dashboards statement
Jun 08, 2023
If Master Trusts intending to go for authorisation wait until March 2019 to submit their application how should the 30 Master Trusts exiting the market select a consolidation partner whilst decisions are pending?
Is there an answer to this question? The Regulator has six months to make a decision on applications for authorisation so if master trusts leave it until the last minute, a decision may not be made until September next year. As those not going for authorisation wait with baited breath to see what options they are left with – this could lead to a total void in Master Trust consolidation until October 2019! And rightly so, how can trustees make monumental decisions about their scheme’s future without knowing the status of their final choices until potentially October? There are also those Trusts with very limited choice – the ones who won’t be attractive to bigger schemes as they offer mainly small pots and a possibly a mass of historic data issues.
What happens here? Members stranded in unauthorised master trusts. Costs eating into members’ funds. Confidence in the pensions industry taking a crippling blow.
Since authorisation was put on the agenda capacity and bandwidth within the Master Trust arena have been industry buzz words. And that all makes perfect sense – eighty plus schemes into probably less than sixty (although how many less than sixty is a hotly discussed topic with theories ranging between 12 and 45) is a mammoth task.
But the bandwidth net casts wider than Master Trusts alone; the many supporting services that play a part in a consolidation all have a finite amount of resource too. Third party administrators, lawyers, data services, actuaries and even communication providers will all be called upon to deliver. But deliver what and to how many is anyone’s guess!
The feedback from the Readiness review has caused many Master Trusts to push back their timing of Authorisation applications. In the meantime those considering an exit could use this time to get their scheme’s prepared for consolidation – starting with engaging with the supporting services that will play a role in the consolidation process.
All of this poses the question – is the authorisation process at risk of hindering rather facilitating Master Trust Consolidation?
