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Experts cautiously welcome master trusts pensions Bill

The new Bill aims to strengthen the governance of master trust pensions schemes

Pensions experts have shared their first impressions of the pensions Bill released on 20 October, which aims to protect workers' pensions by strengthening the governance of master trust schemes.

Under the Bill master trust schemes will be required to demonstrate that they meet five key criteria:

  • That persons involved in the scheme are fit and proper
  • That the scheme is financially sustainable
  • That the scheme funder meets certain requirements in order to provide assurance about their financial situation
  • That systems and processes requirements relating to the governance and administration of the scheme are sufficient
  • And that the scheme has an adequate continuity strategy.

Speaking at the PLSA annual conference in Liverpool, chairman of NEST Otto Thoresen said he felt the Bill is positive overall, but vague. "My early sense of the Bill is that it is what we expected, with nothing dramatic, but there is very little detail," he said. "And 'the devil is in the detail' has never applied more than here. We consider it welcome, but a few years late."

There could be some members whose savings are at risk from master trusts that don’t meet minimum governance standards. The Bill aims to strengthen schemes by requiring them to meet higher operating criteria.

Emma Douglas, head of DC at Legal & General Investment Management, explained the impact the Bill will have on unscrupulous traders.

"This regulation is designed to flush out those master trusts not up to standard," she said. "Going forward we can expect to see some fallout from this, but we don't want to see members stranded. We should work to create a safety net for those affected to avoid the worst of the fallout."

Panel chair Josephine Cumbo, pensions correspondent for the Financial Times, said more work is pending in this area. "Auto-enrolment has been a highly successful policy, but the big challenge of rolling this out to small micro employers is still to come," she said. "We need to answer the big question of how to keep opt-out rates low."