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U.K., Ireland consider master trust regulations

U.K. wants to be able to look at key sector risks; Irish government considering future of regulation

The U.K. Pensions Regulator intends to make ad hoc targeted requests for information and monitoring of multiemployer defined contribution plans under new proposals.

The regulator said in its draft Master Trust Supervision and Enforcement Policy for the plans, known as master trusts, that it expects them to be open, honest and transparent in their interactions and to respond promptly to information requests.

Requests and monitoring will take place particularly in relation to key sector risks identified by TPR, specific concerns the regulator has about a master trust and in relation to areas it wants to understand further, such as through a thematic review.

Authorization of these plans as master trusts will be effective in October. Plans will have six months to apply to the regulator to continue to operate. TPR will then supervise master trusts on an ongoing basis, ensuring they continue to meet the regulator's authorization criteria, relevant legislation and codes of practice.

TPR also said it may use enforcement powers against master trusts should problems arise or legislation is breached, ultimately withdrawing authorization.

"Authorization will create a market with better safeguards," Kim Brown, head of master trust authorization and supervision at TPR, said in a statement accompanying the document. "To do that we need to set the standards which every master trust must meet to operate once they have been authorized or set up in the market. We will also supervise these schemes to ensure that they continue to meet the authorization criteria, are well-run and offer good value for members."

The policy is open to consultation until Aug. 23.

Separately, Ireland's Pensions Authority published a consultation document considering the regulation of master trusts in the country.

The country will implement the Institutions for Occupational Retirement Provision II directive by Jan. 13, which places additional obligations on trustees.

"These increased requirements may lead some employers and trustees to seek alternative arrangements for future pension provision. Related to this is the Pensions Authority's view that there are far too many pension schemes which are delivering poor outcomes for members," the document said.

The authority said to would like to see a smaller number of larger plans for the future. "Taken together this is likely to lead to an increase in the number of master trust arrangements and their membership and the authority is considering what additional obligations should be placed on such schemes to reflect the particular risks that apply in comparison to traditional single-employer schemes."

The consultation closes Oct. 5.