The UK’s Work and Pensions Select Committee has backed calls for tougher regulation on master trusts, which it hopes will be addressed via the inclusion of a pensions bill in the Queen’s Speech this week.
In a report on its inquiry into auto-enrolment, the parliamentary committee yesterday said the latter had been “a tremendous success” and that it should not be undermined by other “government-sponsored forms of saving”, such as the Lifetime ISA (LISA).
However, there are “gaps in pension law and regulation” that have “allowed potentially unstable master trusts” onto the market, it added.
The committee said it supported pensions minister Ros Altmann’s call for a pensions bill to introduce stronger regulation of master trusts, the multi-employer schemes providing pensions under the auto-enrolment policy.
According to the work and pensions committee, the pensions bill should empower The Pensions Regulator (TPR) to enforce minimum financial and governance standards for market entry, ongoing requirements for master trust schemes, and measures to protect member assets in the event of master trust’s winding up.
In a statement, Frank Field, chair of the committee, said “now we must do much more to ensure people’s savings are put in the best possible place, and are secure”.
He added: “To this end, we greatly look forward to seeing a Pension Bill in the Queen’s Speech this week. This is what we and others have been calling for.”
The committee’s report comes as it embarks on an inquiry into the adequacy of defined benefit pension regulation following the collapse of retailer BHS.
Field wrote to chancellor George Osborne earlier this month to ask him to support the inclusion of draft pensions legislation in the Queen’s Speech, citing concerns about master trust regulation, as well as “the range and effectiveness of powers” available to TPR and trustees when it comes to occupational pension funds.
The Queen’s Speech sets out the government’s agenda for the coming parliamentary session and will be delivered this Wednesday, 18 May.
Giving evidence to the work and pensions committee last week, secretary of state Stephen Crabb is seen to have hinted at the announcement of master trust legislation in the Queen’s speech.
He told the committee “there will be announcements in due course about legislation”.
The government is said to have had regulation ready a couple of months ago at least.
Steve Webb, director of policy at asset manager Royal London and former pensions minister, has urged the government to implement the findings of the select committee report.
“This successful programme [for auto-enrolment] must not be de-railed by allowing people to be enrolled into poorly regulated master trusts, nor by letting younger pension savers be distracted into opting out of pensions into Lifetime ISAs,” said Webb.
“The government must commission research as a matter of urgency into the effect on pension saving of Lifetime ISAs and review its policy in the light of that research.”