Pensions Bulletin 2019/10

Our viewpoint

Master trust authorisation becomes a last minute decision for some

The Pensions Regulator’s snapshot of the master trust market as at 28 February 2019 shows surprising little change from the previous month (see Pensions Bulletin 2019/07).  There is now one authorised master trust (authorised on 20 February), 13 applications for authorisation (up from 8), 8 schemes have exited (up from 7) and 31 schemes have told the Regulator they intend to exit (no change).  But that still leaves 38 master trusts (down from 44) who now have literally days to decide whether to seek authorisation or signal to the Regulator their decision to exit the market.

The Regulator reminds trustees of master trusts that there is the facility available to apply for a six week extension if there is good reason to do so.  As at 28 February 2019 one scheme has been granted an extension.


Given the possible six weeks’ extension for schemes to submit applications, and the four months taken for the first authorisation to be granted, we are probably looking at September for the Regulator’s list of authorised master trusts to become fully populated with those currently going through the process.  Until then, there will be a flurry of activity as master trusts fold, members transfer, and the Regulator goes through anything up to 50 applications and decides schemes’ fate.

Pensions Regulator decides that Johnston Press pre-pack does not engage anti-avoidance rules

The Pensions Regulator has decided to take no action for now in relation to the “pre-pack” arrangement involving Johnston Press (see Pensions Bulletin 2018/47), as it found no evidence that would support the use of either a Financial Support Direction or a Contribution Notice to assist the Johnston Press Pension Plan.

In its regulatory intervention report published on 11 March, the Regulator explains the background to the sale of the company’s business and assets which followed a strategic review.  This included a discussion with the Regulator and the PPF on a regulated apportionment arrangement, which was then not pursued as it did not meet PPF-published guidance.

The Regulator considered a number of issues related to the pre‑pack including whether insolvency ahead of it was avoidable and whether the timing of the company entering administration had been designed to avoid a bullet payment of £885,000 under the scheme’s schedule of contributions.  As it could not find anything that would engage its powers, it has for now closed its investigation.


Pre-pack insolvencies can often result in the removal of employer support for a DB pension scheme – as was the case here – and so it is natural for the Regulator to seek to investigate whether there has been debt avoidance (of some £300m in this case).  But it seems that this was an insolvency waiting to happen.  It is now likely that Pension Plan members will have to look to the PPF to provide compensation in lieu of their pension benefits.

Next steps in FRC replacement announced

On 11 March the Business Secretary announced the next steps in the replacement of the Financial Reporting Council through publishing a consultation in response to Sir John Kingman’s independent review (see Pensions Bulletin 2018/51).

The Government, which largely accepts Kingman’s recommendations, promises to “move swiftly” to replace the FRC with a new regulator – to be called the Audit, Reporting and Governance Authority.  Unlike the FRC, the ARGA will be a statutory body with stronger intervention powers.  But until the ARGA becomes a reality the Government will be working with the FRC to take forward 48 of the review’s 83 recommendations.

In addition to setting out the Government’s formal response, the consultation asks for views on how the more complex recommendations can be taken forward, notes where further detailed policy development will be undertaken and a further consultation published, and confirms which matters are for other authorities to consider.

The ministerial statement notes the other work going on in relation to the audit market – in particular the Competition and Markets Authority’s market study of the audit sector and Sir Donald Brydon’s review into the quality and effectiveness of audit (see Pensions Bulletin 2019/07).

In relation to the oversight of the actuarial profession, for which Kingman called for a Government review (working with the Prudential Regulation Authority and the Pensions Regulator) and for the PRA to take on all the actuarial responsibilities currently vested with the FRC, the Government sounds a neutral tone, saying only that it will reflect on these recommendations and bring forward proposals in due course.

Consultation closes on 11 June 2019.


The Government promises to work with the FRC and other stakeholders over the coming weeks to develop a more complete implementation plan.  Hopefully this will set the pace for swift action, despite the many proposals some of which will require an Act of Parliament and so will stretch out the time before all the reforms the Government intends are delivered.

Government responds to CMA investigation into investment consultancy and fiduciary management services

It is now the turn of the Government to write to the Competition and Markets Authority to explain how it will respond to the recommendations that affect the DWP, Pensions Regulator and HM Treasury contained in the CMA’s report into investment consultancy and fiduciary management services (see Pensions Bulletin 2018/50).

In a letter signed off by Guy Opperman, David Fairs and John Glen, the Government states its agreement with the proposed remedies affecting the DWP, Pensions Regulator and HM Treasury.  In particular:

  • The DWP will introduce regulations which put the CMA’s remedies, insofar as they apply to trustees, into the main body of pensions law, to enable the Pensions Regulator to monitor compliance more effectively. Consultation on the draft regulations is promised for later this year with the intention of replacing the CMA Order in this respect in 2020
  • The Pensions Regulator has agreed to produce guidance to assist trustees run competitive tender processes for fiduciary managers and to support trustees when tendering for investment consultancy services. The Regulator intends to consult on the guidance in Summer 2019
  • HM Treasury has promised to consider the CMA’s recommendation that the FCA’s regulatory perimeter be extended to cover services provided by investment consultants and will consult in due course


This letter follows on from that sent to the CMA by the Financial Conduct Authority in February (see Pensions Bulletin 2019/08).  Together they signal a busy time for Government and regulators to put the CMA’s remedies onto a long-term footing.

This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law.  For further help, please contact David Everett at our London office or the partner who normally advises you.

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