Government Announces Master Trusts Consultation and Auto Enrolment Review Findings
The Department of Work and Pensions (DWP) has recently launched a consultation on the draft regulations and policies for the authorisation process and supervisory regime for master trust pension schemes.
At almost the same time, the DWP also announced the results of its review into the initial rollout of automatic enrolment, a review which the DWP described as being intended to “maintain the momentum achieved so far”.
The master trust consultation, which will run until January 12th 2018, has been called to gather opinions on proposed draft regulations that will see the introduction of authorisation and a supervisory framework for master trust pension schemes under the Pensions Scheme Act of 2017.
The automatic enrolment review, entitled ‘Automatic-enrolment review 2017: maintaining the momentum’, suggests changes to the initial rollout, to take effect from the mid-2020s. Both the consultation and the report contain significant insight into the direction the pensions landscape is heading.
The Pensions Regulator (TPR) and Master Trusts
Under the proposed draft regulations, The Pensions Regulator (TPR) will be responsible for the authorisation and supervision process. TPR will assess potential master trust schemes against a predetermined set of criterion, including the financial sustainability of the scheme and whether the scheme is beneficial to employees.
Any suggested draft regulations aim to ensure that members of master trust schemes have equivalent protections to members in other types of schemes, and that any risks are proportionately and proactively regulated.
Changing the automatic enrolment landscape
The headline findings in the DWP review of automatic enrolment include a recommendation to lower the age of enrolment from 22 to 18, bringing an extra 900,000 young people into workplace pension schemes.
At the same time, the DWP proposes changing the framework of workplace pension calculations to remove the lower earnings limit of £5,876 and instead calculate contributions on the first pound earned. The report calculates that this could add £2.6 billion to pension saving and encourage those with multiple jobs to opt-in.
The report also sounded a note of caution on a long discussed challenge, namely the inclusion of the self-employed in automatic enrolment. The DWP believes that, after careful review, there is “no single or simple and straightforward mechanism” to include self-employed workers in automatic enrolment and propose a number of “targeted interventions” next year to assess the situation better.
The Belief of The Creative Pension Trust
As a master trust, The Creative Pension Trust supports increased regulation of workplace pensions. We hold ourselves to the highest professional standards, actively ensuring that all our financial products comply with all financial regulations.
The Creative Pension Trust welcomes the outcome of the DWP’s consultation regarding master trust pension schemes. Increased regulation only serves to provide a better experience for employers and pension scheme members, providing them with greater pension security, flexibility and choice.
The fact that master trusts are being reviewed by the DWP, alongside The Pensions Regulator (TPR), only serves to reinforce the continuing commitment of regulatory bodies and the UK government to securing a better future for the entire UK workforce.
In a similar vein, the changes to automatic enrolment, which will see more people saving for their future, are also welcome, though most of these suggestions are some way off becoming policy. The continued efforts to find a solution which suits self-employed workers and helps them to save for their own future is also welcome.
David White – Managing Director of Creative Auto Enrolment, the sponsor of The Creative Pension Trust, said: “Auto enrolment into regulated company pension schemes gives employees peace of mind that their financial future is secure. We would like to see the Government take forward the new proposals to have more people saving more for their retirement at the earliest opportunity.” To learn more about The Creative Pension Trust and understand how master trusts affect you or your business, visit us here today or call: 0345 463 7932.