UK – The UK government should have licensed pension providers ahead of auto-enrolment, the chief executive of Now Pensions has said, as he argued that the independence of some pension trustees was an "illusion".

Speaking to IPE before pensions minister Steve Webb said forthcoming quality standards for defined contribution (DC) funds would likely lead to scheme closures, Morten Nilsson said current entry barriers for trust-based funds were too low.

He added that it was important that pension funds meet a certain minimum standard across investment, governance and other key areas – a view seemingly in line with Webb.

"If you had done that before auto-enrolment had kicked off, the communications with employers would have been a lot easier," he said, adding that this vacuum may now need to be addressed through a private initiative.

"Going into auto-enrolment, it would have been a very good idea if you had said that everyone was welcome to apply, but that the government would approve the schemes that could enter the market."

He said when Denmark's ATP first considered entering the UK market, it looked at the National Association of Pension Funds' proposals for a limited number of super trusts, published by the organisation following recommendations to launch what has since become the National Employment Savings Trust.

Nilsson said he thought at the time that a licensing approach made sense both then and now, but that such government-led initiatives were likely a thing of the past, and that the industry needed to look to the future.

Both Now Pensions and the Master Trust Association, of which it is a founding member, have repeatedly called for a quality mark for pension providers.

The NAPF currently runs its own initiative, the Pensions Quality Mark.

Nilsson also raised concerns about laws governing trust-based pension funds in the UK, saying that it is currently open to abuse.

"If you want to abuse the system, you can, because you can set up structures where you completely control [the trust]," he said, noting that it was initially a "genuine surprise" to discover the problems.

He noted that in certain circumstances this could result in the independence of trustees being an "illusion".

He added: "We really like the trust structure for many other reasons, but it seems wrong that you can receive people's money and not be under a stricter regime."

He said that while it may be an oversimplification of the legislation, trustees currently only needed to consult with investment consultants to be "off the hook" when it came to any asset allocation decision.

"For me, some of the structures are more about removing liability than actually taking responsibility," he said.

"You need to have a structure where the responsibility is very clear and, once you have the right skill sets, then you can work on having a reasonable liability structure around it."