Not such a well plan Mr Regulator

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If you are one of the 1900 participating employers in the Welplan master trust, you’ll be waking up this morning with some nasty problems

  1.  Where to go for a new workplace pension
  2. How to tell the staff your horse has been pulled up
  3. How to find the money to manage a transition to a new arrangement

I don’t think that the risk of any of this happening was flagged to employers. Welplan were one of the first workplace pensions to appear on the Pension Regulator’s list of providers approved under the Master Trust Assurance Framework. Welplan was established in 1988 and is a part of a wider business that is very much a going concern.

It has advertised itself as the employer’s friend being free for employers to join.

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The risk of choosing the wrong workplace pension has been flagged by http://www.pensionplaypen.com since it started helping employers choose a pension in 2013. Welplan has never appeared on Pension PlayPen’s searches because it refused to do the due diligence we repeatedly asked it to do.

Despite this Welplan has the Pensions Regulator’s kitemark “master trust assurance framework” and it has a five star rating from Defaqto. welplan

It’s CEO Bruce Kirton , seems to think that closing its master trust is a strategic decision for his business, his customers may see it differently. Pension schemes are set up with a view to managing people’s assets to and through retirement. So I have little time for this statement – taken from the press release issued by Welplan yesterday.

“This has been a very difficult decision. We’ve always been and will remain committed to offering the best possible service and value to our employers and their members in both pensions and employee benefits.

“But, over the last six months it has become increasingly clear that the master trust regulatory environment is one that favours much larger scale. There is now no meaningful place for a small- or even medium-sized specialist business such as Welplan Pensions. This is something we’ve already seen with other smaller providers being acquired by larger ones.”

This is unacceptable.

The trustees of Welplan have a fiduciary duty to their members and Welplan has a duty to its participating employers. It is not good enough to simply close the doors and expect those employers to find a new provider and the members to be forced into a new arrangement with all the bother of consolidating pots down to them.

Blaming the Pensions Regulator for disproportionate regulation is also unacceptable. Clearly what is happening to master trusts is difficult for smaller plans which are having to come up with substantial amounts of reserve capital and a great deal of paperwork to stay in the game. But for smaller master trusts to have left it till now to work out that where regulation was heading is naive at best.


Not an acceptable precedent.

As this chart , clipped from Professional Pensions shows, there are many other small master trusts in the same position as Welplan.

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Most are run on a “for profit” basis , some have mutual structures, but all have made promises to participating employers that they will sustain their service. On the basis of that promise, employers have committed their and their staff’s money to the trust of that provider.

We have had a recent instance of a large provider changing ownership with Cardano buying NOW pensions as a going concern.

There is no reason why Welplan could not have found a new owner for the £147m scheme – set up in 1988. If I was the owner of a rival master trust that was continuing, I would be furious with Welplan. Welplan are bringing master trusts into disrepute.

As the owner of http://www.pensionplaypen.com. ,  a website set up to help employers choose the right workplace pension, I am furious with Welplan.

This is not an acceptable precedent. The Pensions Regulator needs to reassure the market that the 55,000 members of Welplan are not going to suffer detriment and that it will be exercising its statutory duty of protecting members.


Where is the Pensions Regulator?

I am surprised that the Pensions Regulator has not demanded an agreed exit route for employers and insisted that Welplan supports the transition for employers and members with its own resources

A visit to its website’s choose a pension pages reveals this information – still live the day after Welplan announcement

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I can see no announcement from the Pensions Regulator as to what action participating employers should take, or reassurance to members.

By any stretch, an occupational DC scheme with £188m of 55,000 people’s money, deserves a statement of intent when simply closing its doors – as Welplan is doing.


Too much process – too little care

Pensions are about people. The process that Welplan says has driven it to close its doors on the people it has in its trust, needs to have a plan B for situations such as this.

There is no PPF for occupational DC plans, members are supposed to be protected by the Master Trust Assurance Framework (which Welplan has) but what good is that if Welplan can simply walk away from its obligations as it appears to be doing.

Presumably financial services providers  will now be asked to step up and compete to take on Welplan’s assets (as Cardano did for NOW). No doubt the Pensions Regulator will be involved.

But for those 1900 employers and 55,000 staff in Welplan today, there needs to be a firm assurance from the Regulator that they are on top of this. That means more than taking Welplan off its list, it means making a statement that shows it has a process and it cares.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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6 Responses to Not such a well plan Mr Regulator

  1. Phil Castle says:

    £147mill / 55,000 members is an average pot size of under £3k which is totally uneconomic and it’s been running since 1988!
    Some of this master trusts need to be merged, but as Henry says, not like this.

  2. Rob Reid says:

    “As this chart , clipped from Professional Pensions shows, there are many other small master trusts in the same position as Welplan.” Henry can’t see the chart you refer to?

  3. henry tapper says:

    Thanks Rob – a mistake rectified – thanks for the spot

  4. Bob Ward says:

    Appalling but no surprise. From experience tPR were negatively obstructive. I can picture the vulture statutory trustees waiting in the wings to be appointed. Then within 3 months there will £400k of fees extracted from members’ balances!!
    Surely the new regulations provide for the enforced hand-over to another trust/ scheme.
    I’ve said many times that the regulator’s sledgehammer direction for schemes which fail is to wind-up with its consequent massive costs. The first objective should be to migrate the scheme with a suitable saviour, and as you say, with the old owners picking up the costs, NOT the members.

  5. James Markham says:

    Spot on as ever Henry. Thanks for putting this in the public domain.

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