Ian Neale, Director at Aries Insight, said: “With so much industry attention being devoted recently to the Master Trust authorisation process, which began on 1 October, concerns have arisen around the new expanded definition outlined in the final regulations made a few days earlier. While many have been focused on whether the known Master Trusts are prepared for the new authorisation regime, it seems that this concern should be shared by a larger group.
“Cluster schemes (which the DWP has defined as schemes where the same company provides insurance, administration and trustee services, there are no other trustees, and the scheme is not otherwise classified as a Master Trust) could potentially still be considered within the scope of these new regulations. Even if such an Executive Pension Plan or legacy agreement hasn’t been marketed, promoted or actively offered for years, there is still risk of the plan being brought under the Master Trust umbrella - due to the regulations’ updated definition.”
Neale added: “This is not an isolated issue and many insurers could be caught out by such legacy schemes being treated as a Master Trust in this way. With the Regulator potentially taking up to six months to review applications and the authorisation deadline in April, this is an issue which needs to be addressed as a matter of urgency – or the number of those closing their doors as a result of this process could continue to rise quite dramatically.”
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