The Pensions Bill
Post by Mearns & Company in News
Following the introduction of auto-enrolment many new providers entered the market. These firms created master trusts under which to hold member’s savings. Under the plan announced alongside the Queen’s Speech, millions of pension savers will be better protected.
There have been fears that those who pay into some auto-enrolment pensions could lose their savings if the scheme collapses. Stricter supervision of the master trust schemes by the regulator will be introduced by The Pensions Bill. An investigation by the BBC in February found that dozens of master trusts weren’t big enough to survive. It is believed this meant that up to a quarter of a million people were at risk of losing their savings. There was concern from the MPs on the Work and Pensions Committee regarding the “potentially unstable master trusts” and government action was called for.
The Pensions Bill will give the Pensions Regulator (TPR) increased power to authorise the schemes and intervene if necessary. Once put in to action, the master trusts will have to prove that they meet the new strict criteria. There are currently only five of the 72 master trust schemes that qualify for TPR’s kitemark, and there is no responsibility with the regulator to check that the claims made by the schemes are correct.
The new bill has been welcomed by The Pensions Regulator. TPR’s chief executive, Lesley Titcomb said –
“We have voiced concerns for some time about the need for stronger legislative standards for master trust and have worked with the government and other regulators to improve levels of protection for members. We have been calling for a significantly higher bar regarding authorisation and supervision, and we are pleased that today’s announcement proposes to give us the power to implement these safeguards.”
The Financial Conduct Authority (FCA) has collected data that suggests that as many as 700,000 people may be liable to pay early exit fees when trying to withdraw money from their pensions. It was decided that these fees will be capped at an as yet undecided amount, and the new bill is set to help those in this position.
The Pensions Advisory Service, Pension Wise and the Money Advice Service will be brought together to create a new guidance body to help those in debt and those who are retiring. Pensions minister Ros Altmann said –
“We will work closely with the sector in the coming months to further shape our plans.”
It is important for the government to ensure that public confidence is increased in the auto-enrolment sector as the collapse of any scheme would create panic amongst savers.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.