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Pensions: A New Regime For Master Trusts

Phil Spary, Director, Pension Funds
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From 1 October 2018, Master Trust pension schemes will have six months to apply for authorisation from TPR if they wish to continue operating.

The Pensions Regulator (TPR) published its Code of Practice no. 15 - Authorisation and supervision of Master Trusts.

This marks a fundamental change in the way TPR will operate, directly authorising and supervising Master Trusts for the first time.

Applications are not yet open, but the TPR will publish new application forms, and guidance on how to complete them, on 1 October 2018 on their website:

The new code details the actions Master Trusts must take to be authorised.

Systems, processes and assurance

The new authorisation process will focus a lot of attention on systems and processes, which emphasises the importance TPR places on establishing and maintaining adequate internal controls.

The requirements set out in the code are very detailed, but in certain cases they are still a little unclear, so it is likely they will be clarified before 1 October 2018.

Many Master Trusts have found it hard to work out what evidence they need to present, to prove the presence and effectiveness of systems and processes.

For 17 system and process requirements, TPR prefers external assurance.

In our view, a number of new requirements are similar to the control objectives set out in the Master Trust Assurance Framework. But there are gaps, and in these cases it is sensible to make sure these procedures are externally assessed. 

Supervision post-authorisation

Master Trusts will have to continue to meet authorisation criteria after they have been authorised the impact of de-authorisation would probably be catastrophic to any Master Trust.

How this ongoing compliance will be regulated is not clear yet, but we do know that:

  • Master Trusts will need to self-declare compliance via a supervisory return
  • TPR will need to be notified within one day if there is a failure of systems and processes which has a significant adverse effect on the security or quality of data, or on service delivery.

Updated guidance and further guidelines will be produced by TPR in the run up to 1 October 2018.

How we can help

Time is short, and the new code is complex, so we can help with your application.

We have in-depth knowledge of codified requirements, so we can help Master Trusts assess their systems and processes.

We provide:

  • independent external assurance for the design and effectiveness of systems and processes
  • bespoke assurance for authorisation preparation and ongoing supervisory requirements.

We can deliver assurance reports to supplement applications in realistic timeframes.

If you would like to discuss any of this, please contact your usual Crowe Pension Funds advisor or Phil Spary, Director in our National Pension Funds Team.

Contact us

Andrew Penketh
Andrew Penketh
Partner, Head of Pension Funds