Workers' pensions get more protection in new bill
More than six million workers who pay into master trust pensions will see their money better protected, under a bill that has been published.
There had been concern that their savings might be at risk, should one of the pension schemes collapse.
Master trust pensions will now need to meet higher standards of governance, while there will be new powers for the regulator.
The bill will also enable a cap to be put on exit fees from pension pots.
"We want to make sure that people saving into master trusts enjoy the same protection as everyone else, which is why we are levelling-up that protection, to give these savers more confidence in their pension schemes," said pensions minister Richard Harrington.
Master trust pensions are typically used by smaller employers, and include the government-backed NEST scheme, as well as Now: Pensions.
In February this year the BBC reported that up to a quarter of a million people who pay into master trust schemes might not have their savings protected.
It also aired concerns about the qualifications of people who are allowed to set up master trust pensions.
When the bill becomes law, operators of master trust schemes will have to show:
- those involved are "fit and proper"
- schemes are financially sustainable
- governance and administration are sufficient
- there is adequate continuity strategy
The chief executive of The Pensions Regulator (TPR), Lesley Titcomb, welcomed the publication of the bill.
"We are very pleased that the Pension Scheme Bill will drive up standards and give us tough new supervisory powers to authorise and de-authorise master trusts according to strict criteria, ensuring members are better protected and ultimately receive the benefits they expect."
However, the chief executive of one of the biggest master trust schemes, Now: Pensions, said he was disappointed that the master trust assurance framework - a kitemark for such schemes - would not be made compulsory.
"The voluntary assurance framework was introduced as a quality standard to enable trustees of master trusts to demonstrate high standards of scheme governance and administration," said Morten Nilsson.
"Making it compulsory and building on this existing framework seemed logical."
The bill will also enable regulators to introduce a cap on exit fees from pension pots, which in some cases had been as high as 10%.
The Financial Conduct Authority (FCA) wants there to be no exit charges on private pensions from March next year. The government wants occupational pensions to have a similar cap.
The Pensions and Lifetime Savings Association (PLSA) welcomed the bill, but said it would require detailed scrutiny to ensure it works as intended.