The CEO of the Pensions Regulator raised concerns about the rapid growth and sustainability of defined contribution multiemployer plans, known as master trusts, in the U.K., as millions of smaller employers prepare to begin automatically enrolling their employees into a DC plan.
Lesley Titcomb said at the annual National Association of Pension Funds conference Thursday, held in Manchester, England, that the regulator is speaking to the government about master trusts, as TPR has “identified it as a gap” in regulation.
Ms. Titcomb said one potential is to consider making master trust assurance “compulsory.” The idea is to demonstrate high-quality governance and administration standards. The Pensions Regulator has its own voluntary assurance framework, and Ms. Titcomb expressed disappointment that only three master trusts have signed up.
Speaking on her concerns of master trusts, she highlighted that they have no “financial requirement … so if they do go out of business it could be messy. … I want to know that if they do go out of business we can deal with it in an orderly fashion” with transfers to another plan.
Further addressing the upcoming automatic enrollment of smaller employers, Ms. Titcomb added, “Some we will have to nudge; a few we will have to kick. And a few we will have to fine.”