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Master trust readiness review

Between 1 May and 15 June you can submit a draft authorisation application to us using our online portal. We will then provide feedback about the quality of your application by the end of August. This process is known as a readiness review.

Submitting a draft application is voluntary but it will help you prepare for your formal application. Whether or not you decide to complete a draft application will not impact the decision-making on your formal application.

Important updates

Based on feedback – at our stakeholder event and via the code consultation process – we have made some changes to what you need to send us as part of your readiness review, and have clarified some areas of guidance on the authorisation criteria.

Evidencing authorisation requirements

You told us that further direction would be useful around the evidence required for the authorisation criteria.

You know your scheme and are best placed to consider what evidence and what level of evidence is appropriate to your circumstances. In your application, you should provide us with a clear narrative outlining how you meet the criteria. Rather than just sending us multiple documents, you should also provide links to the relevant documents specifying the particular sections, pages or paragraphs relevant to each requirement.

Your narrative sets out what you do. The supporting documentation provides evidence of how it works in practice, and how the controls you have in place will ensure it will continue to be effective over time.

Example: If your trustee board meets quarterly, in the systems and processes questionnaire you could state this and then provide the schedule of meetings and the minutes of, for example, the last three meetings. In this circumstance you would be demonstrating the regularity of meetings and that this regularity is considered appropriate due to the scale, depth and nature of the items covered.

Assurance reports signed-off more than six months before point of application

You commented that our requirement that independent external reports (for example AAF reports) should have been signed-off within six months before the application date does not allow for the annual lifecycle of an audit.

We have therefore adjusted our position on this and will accept older reports as part of your evidence, with certain caveats.

We’ve updated the systems and processes guide (PDF, 509kb, 35 pages) to reflect this – specifically page 4 on the section on ‘The role of assurance, accreditation and other independent external assessments’.

Excluding chair’s statements from draft application evidence (systems and processes)

We are now requesting that you do not submit your chair’s statement as part of the materials submitted in the systems and processes section of a draft application.

We have no discretion as to whether we impose a penalty for non-compliance with the chair’s statement requirements. Therefore, if we review a chair’s statement submitted as part of the readiness review, we would have no option but to impose a penalty if we come across any non-compliance.

The intention of the voluntary readiness review is to provide feedback only on the nature and appropriateness of evidence which is included as part of draft applications and it is not intended to be an assessment of compliance with statutory requirements under other legislation.

With this in mind, we also do not expect you to complete the following sections of the systems and processes questionnaire (OCX, 56kb) (these questions are also highlighted in the questionnaire itself): 3a, 9b, 9d, 15c, 15d and 15f.

If you have already submitted your full chair’s statement as part of your draft application, we will send it back to you with no further action.

The draft application will not cover all the requirements of authorisation. The information for certain criteria, including ‘systems and processes’ and ‘financial sustainability’, will be similar to what is required for authorisation. However, for criteria such as ‘fit and proper’, the information you will need to provide is not as detailed. You will need to provide supporting information and evidence in relation to all requirements.

You can only submit one draft application per master trust so you should provide as much of the information and evidence required as possible.

The information you send us as part of your draft application should be as close as possible to what you plan to provide when you apply for authorisation from 1 October 2018. This will enable us to provide you with practical and relevant feedback.

There will be certain mandatory fields in the online portal where you’ll need to upload documents to support your draft application. If you don’t have this information yet, you should upload a document saying why you’re unable to provide the information and what you plan to upload with your formal application.

Submitting your application

You can submit your draft application using our online portal. If you can’t see the master trust option when you log in, you should contact us.

The draft code of practice provides practical guidelines on how to meet the legal requirements of the Pension Schemes Act 2017. We have also published the forms and guidance that you’ll need for the readiness review.

Multiple schemes and cluster schemes

The requirement to be authorised is at scheme level rather than provider level. Therefore, each scheme needs to be authorised to operate in the market.

Cluster schemes are an exception to the principle of one application per scheme. You should treat these schemes as one master trust and make one application for the group. You can read more about cluster schemes in paragraphs 27 to 32 of the draft code.

Feedback on your draft application

We will provide feedback on your draft application by the end of August 2018. Any view or opinion from us is non-binding, based upon our understanding of the information provided and provided for guidance only.

Our feedback will be on the quality of the evidence in the draft application and is not an assessment of whether the master trust meets the standards required for authorisation. Therefore it’s not an indication that the master trust will, or will not be, authorised. The decision on whether to authorise an existing master trust will be made on formal applications by the Determinations Panel, a committee of The Pensions Regulator that operates separately from other parts of the organisation.

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