What a week for UK Savers! (guest blog- Ralph Frank

Ralph’s been away  (form this blog) for a couple of weeks-I’ve missed him! Now he’s back- that’s good!


This past week has been a landmark week for pensions and savers in the UK. The Government made two significant, and positive, announcements in short order:

  1. The proposed secondary annuity market was scrapped before being launched; and
  2. Measures for more robust regulation of Master Trusts have been tabled.

Are these two events a harbinger of a renewed focus on nurturing a long-term, robust savings environment from the new Government?

The less said about the proposed secondary annuity market in this blog, the better. I’m encouraged to see that reducing the long-term risk of consumer detriment has been prioritised ahead of raising short-term tax revenue. The scrapping has also ended debates related to the consistency of treatment of Defined Benefit and Defined Contribution savers as well as who has access to the secondary annuity facility. Those fortunate enough to have a Guaranteed Annuity Rate will continue to have to access this value by drawing the annuity rather than being able to crystallise the benefit by selling on the annuity as they would have been able to had a secondary annuity market come to pass.

The Pension Schemes Bill, that will ultimately become the Pension Schemes Act 2017, establishes criteria for closer oversight of Master Trusts (MTs), starting from when these arrangements are set up (or, when the Act comes into force, for existing MTs). There is still much detail to be added in the form of associated Regulations but the direction of travel is clear. The criteria fall into five categories:

  1. People – those people involved in the MT are fit and proper;
  2. Financial sustainability – the MT is financially viable over time;
  3. Financial backing – sufficient robust backing exists for the MT, if needed;
  4. Governance and administration – systems and processes exist to the level required to fulfil the MT’s operational requirements; and
  5. Continuity strategy – how members’ interests are to be protected if the MT might no longer be able to serve the members.

The Pensions Regulator has also been given power to intervene, potentially de-authorising MTs where MTs don’t meet the criteria and/or are at risk of failure. I expect that these changes will result in greater protection for members of MTs. However, this protection will come at a price – a factor that will impact the upcoming review of the Charges Cap. It remains a moot point whether these regulatory changes, however welcome they are, would have been needed had the trustees of those MTs not acting in the interests of their members been challenged to demonstrate how their actions were consistent with their fiduciary duty.

It is still relatively early days for the new Government. However, this week’s actions represent, to my mind, taking a long-term view towards fostering a robust savings environment for later life. This is a welcome change from the measures enacted by the previous Chancellor of the Exchequer. What will the next move towards supporting long-term savers be?

Ralph Frank

CEO, DC (UK) at Cardano

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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