Are You Ready for Master Trust Code of Practice 15?
The follow-up draft code with more information on how master trusts can achieve authorisation is now open for consultation with the closing date 8 May 2018.
The question is: “Are you ready?”
There are 5 authorisation criteria to achieve:
- Fit and proper
- Systems and processes
- Continuity strategy
- Scheme funder
- Financial sustainability of a business plan.
The draft code is 85 pages long and gives a lot of information. For instance, the Financial sustainability with business plan covers 29 pages.
The code sets out what the Regulator expects to take into account in deciding whether the master trust has met all the required authorisation criteria and can operate after 2 April 2019. Once authorised the master trust will need to provide satisfactory updates through a yearly supervisory return to remain in operation.
The draft code is too detailed to summarise in a blog. It is a great change in approach by the Regulator as it will be directly responsible for authorising and supervising particular pension schemes with the code and its supporting guidance on Continuation Strategy and use of external evidence.
Interesting questions raised by the Regulator
It raises interesting questions about what expected controls and processes are in place. For instance, for administration system transactions the TPR expectation is: “There are authorisation levels in the administration system to prevent payments of certain sizes exceeding those allowed by the trustee mandate.” (Systems and processes, page 22 of 85).
A response to this is often that electronic payments have to go through so many levels of secure approval and checking before being paid, that such a control is not necessary. Although it may have been in the past when there were not enforced IT security and access levels around making payments
Take part in a 10 question research project
Therefore, I extend an invitation to trustees and trustee secretaries to take part in a short 10-question research project on aspects of the draft code through 1-to-1 calls. Those responding will get to see all the anonymised results with shared learning.
Also, should you wish to have a helping hand with reviewing your draft authorisation submission to the Regulator and presentation of evidence, please get in contact.
Click here to access to the draft code of practice no. 15 ‘Authorisation and supervision of master trusts’ (March 2018).
For any queries or to take part in the research project contact Andrew.Riley@assureuk.co.uk alternatively you can call on 020 7112 8300.