A new Pensions Bill that includes measures to give The Pensions Regulator more powers to regulate master trusts, cap early exit charges, and increase protection for savers, was announced on Wednesday in The Queen's speech.
The new bill comes after demands by the Work and Pensions Committee for tighter regulation of master trusts.
It will ask master trusts to meet strict new criteria before entering the market and create new powers for TPR to take action.
While master trusts are essential for delivering automatic enrolment, there is a chance that a small number of poorly run trusts could be putting savings at risk.
At the moment, only nine of 72 master trust schemes are listed on TPR's website as qualifying for their kitemark.
The new bill should grant power to the regulator ensure all master trusts have strong financial backing and competent trustees, as well as laying out a process for moving members – without financial loss - in the event that the trust fails.
Lesley Titcomb, TPR chief executive welcomed the announcement, saying: "Currently new master trusts are subject to far less regulatory scrutiny than new contract-based providers, so we have encouraged employers to only choose master trusts which have achieved master trust assurance or group personal pension plans."
"We continue to believe that well run, scaleable and sustainable master trusts, along with GPPs, are a good choice for employers seeking to comply with their automatic enrolment duties," she added.
The bill will also help savers who have been trying to withdraw money from their pension funds, but have been faced with early exit fees.
Data collected by the Financial Conduct Authority (FCA) suggests that as many as 700,000 people might be liable to pay such charges.
As previously announced, those fees will now be capped - although it is not known at what level.
A new guidance body will also be set up, to give help to people retiring, as well as those in debt, bringing together the Pensions Advisory Service, Pension Wise and the Money Advice Service.
Pensions minister Ros Altmann said: "We will work closely with the sector in the coming months to further shape our plans."
The Pensions and Lifetime Savings Association also welcomed the Bill and its chief executive Joanne Segars said the bill is an "ideal opportunity" for the Government to secure the success of automatic enrolment and pension freedoms.
She said: "For the millions of people saving through automatic enrolment we must make sure their money is working hard for them and is secure in strong and high quality schemes.
"For many savers who now want to make use of their hard-earned savings it seems pension freedoms bring as many questions as answers – and savers will be looking to schemes and providers for help."
"This Pensions Bill should lay down a sure foundation for a long-term savings policy in the UK and establish a pension commission."
The Queen also announced the new Lifetime Savings Bill which includes the Lifetime Isa, announced earlier this year, which offers a 25% bonus on all savings up to £4,000 a year.
First published 19.05.2016
Lindsay.sharman@wilmingtonplc.com
