The Occupational Pension Schemes (Master Trusts) Regulations 2018

Publication Date:January 01, 2018

2018No. 983

PENSIONS

The Occupational Pension Schemes (Master Trusts) Regulations 2018

Made5thSeptember2018

Coming into force in accordance with regulation 1

The Secretary of State for Work and Pensions makes the following Regulations in exercise of the powers conferred by sections 1(3)(b), 4(5), 7(3)(b) and (4)(a), 8(4), 9(2), 10(4) and (6), 11(2), 12(5) and (6), 15(2), 16(3), 17(3)(a), 18(5)(a), 22(6)(b) and (7), 24(1)(b), (3) and (4)(a) and (c), 25(4), 26(5), 27(4) and (6), 28(2), 30(2) and (4)(b) and (c), 33(4), 36(1), 38(2) and (3), 39(5), 40(1) and (2) and 42 of, and paragraphs 1(6) of Schedule 1 and 5(c) of Schedule 2 to, the Pension Schemes Act 2017( 1).

A draft of these Regulations has been laid before and approved by a resolution of each House of Parliament in accordance with section 42(4) of the Pension Schemes Act 2017( 2).

The Secretary of State has exercised her discretion under section 42(5) of the Pension Schemes Act 2017 to make regulations subject to affirmative resolution procedure which would otherwise be subject to negative resolution procedure.

Citation and commencement

1.—(1) These Regulations may be cited as the Occupational Pension Schemes (Master Trusts) Regulations 2018.

(2) These Regulations, with the exception of regulation 23(2)(b)(i), come into force on 1st October 2018.

(3) Regulation 23(2)(b)(i) comes into force on 6th April 2019.

Interpretation and notices

2.—(1) In these Regulations—

“the 1993 Act” means the Pension Schemes Act 1993( 3);

“the 1995 Act” means the Pensions Act 1995( 4);

“the 2004 Act” means the Pensions Act 2004( 5);

“the Act” means the Pension Schemes Act 2017;

“additional charge” means an administration charge for advice, information or a service provided to a member, including where the member requests a transfer to another pension scheme;

“the Administration Regulations” means the Occupational Pension Schemes (Scheme Administration) Regulations 1996( 6);

“active member” has the meaning given by section 124(1) of the 1995 Act;

“arrangement” means an allocation of contributions to one or more investments;

“the Charges and Governance Regulations” means the Occupational Pension Schemes (Charges and Governance) Regulations 2015( 7);

“Code” means a code of practice issued by the Regulator;

“commencement date” means the date on which section 3 of the Act (prohibition on operating scheme unless authorised) comes into force for all purposes;

“the Companies Act” means the Companies Act 2006( 8);

“default arrangement” has the meaning given in regulation 3 of the Charges and Governance Regulations( 9);

“discounted level” means a lower level of an administration charge which applies in particular circumstances, including—

(a) a lower level which applies to members from a particular employer, or

(b) a lower level which applies to a member according to the value of the member's rights in the scheme;

“financial regulator” means the Financial Conduct Authority or the Prudential Regulatory Authority;

“receiving scheme”, except in Schedule 5, means a pension scheme to which (subject to Part 4ZA of the 1993 Act( 10) (transfers and contribution refunds) and to provision made by regulations under section 24(2)(b) and (4) of the Act) members' accrued rights and benefits under the scheme are proposed to be transferred;

“the Regulator” means the Pensions Regulator;

“scheme year” means—

(a) a year specified for the purposes of the scheme in any document comprising the scheme, or

(b) if no year is specified under paragraph (a), a period of 12 months beginning on 1st April or on such other date as the trustees select;

“service provider” means a person providing advisory, administrative, investment or other services in respect of the scheme;

“third-party charge” means any administration charge imposed on or in respect of a member by a person other than the trustees;

“the TUPE Regulations” means the Transfer of Undertakings (Protection of Employment) Regulations 2006( 11).

(2) Except where paragraph 1 of Schedule 5 provides otherwise, sections 303 and 304 of the 2004 Act (service of notifications and other documents) are treated as applying to notices and notifications issued under these Regulations.

Connected employers

3.—(1) For the purposes of section 1(3)(b) of the Act (Master Trust schemes: definition), an employer (“A”) is connected with another employer (“B”), and an employer which is a group undertaking of A is connected with an employer which is a group undertaking of B—

(a) where A and B have separate legal identities but are structured so that the economic position of the shareholders of each is, as far as practicable, the same as if they held shares in a single company comprising the combined businesses of A and B;

(b) where A employs scheme members jointly with B;

(c) in respect of active members of the scheme, following a transfer of those members to A from B (but see paragraph (3));

(d) where A holds or controls, or in the previous six months has held or controlled, at least 33% of the voting power in B;

(e) where A is, or in the previous six months has been, engaged in a joint venture with B.

(2) In paragraph (1)—

(a) “employer” means a person who employs or engages persons who are members of the scheme;

(b) “group undertaking” has the meaning given by section 1161(5) of the Companies Act;

(c) “joint venture” means an arrangement, contractual or otherwise, by which two or more parties undertake an economic activity that is subject to joint control.

(3) Where the transfer referred to in paragraph (1)(c) is not a relevant transfer as defined in regulation 2 of the TUPE Regulations( 12), A and B (and their respective group undertakings) are connected for no more than six months beginning with the date of the transfer.

Application for authorisation

4.—(1) The following provisions of this regulation apply for the purposes of section 4(5)(a) of the Act (application for authorisation).

(2) The other information to be included in an application, in relation to each person acting in a capacity mentioned in section 7(2) or (3) of the Act (fit and proper persons requirement), is—

(a) in the case of an individual—

(i) the person's full name;

(ii) the person's date of birth;

(iii) the title and description of the person's role in relation to the scheme;

(iv) the person's residential address and address for correspondence, if different, including any change to the residential address in the five years before the date of the application for authorisation;

(v) a criminal conviction certificate obtained by means of an application in accordance with section 112(1) of the Police Act 1997( 13) or, in relation to the law of a country outside the United Kingdom, any equivalent document;

(b) in the case of a body corporate within the meaning given by section 1173(1) of the Companies Act—

(i) the full name of each person who exercises a function in respect of or on behalf of the body corporate acting in such a capacity;

(ii) the date of birth of each such person who is an individual;

(iii) the residential address and address for correspondence, if different, including any change to the residential address in the five years before the date of the application for authorisation;

(c) in the case of any person, responses to a list of questions raised by the Regulator in the application to assess whether the person is a fit and proper person.

(3) The other information to be included in an application, in relation to whether the systems and processes used in running the scheme are sufficient, is—

(a) in the case of a scheme in respect of which an annual statement of governance has been prepared as required by regulation 23 of the Administration Regulations( 14), the most recent statement prepared in accordance with that regulation;

(b) in the case of a scheme in respect of which an annual statement of governance as required by regulation 23 of the Administration Regulations has not previously been prepared, a document which contains, as far as practicable, the information which would be required to be included in a document prepared under that regulation in respect of the scheme;

(c) in cases where a statement of investment principles( 15) has been prepared in respect of a scheme in accordance with regulation 2 of the Occupational Pension Schemes (Investment) Regulations 2005( 16), the most recent statement prepared in accordance with that regulation;

(d) detail of the systems and processes used, or intended to be used, in the running of the scheme, and whether they have been devised, applied or maintained by the scheme or a service provider, including details of the matters set out in Schedule 4.

(4) An application for authorisation must be accompanied by a fee of—

(a) £41,000 for an existing scheme, or

(b) £23,000 for a scheme which is not an existing scheme.

(5) In paragraph (4), “existing scheme” means a Master Trust scheme which was in operation before the commencement date.

(6) The Regulator must pay fees received under paragraph (4) to the Secretary of State, unless the Secretary of State with the consent of the Treasury directs otherwise.

Fit and proper persons requirement

5. Schedule 1 sets out the matters that the Regulator must take into account in assessing, for the purposes of section 7 of the Act (fit and proper persons requirement), whether a person involved in a Master Trust scheme is a fit and proper person.

Financial sustainability requirement

6.—(1) Part 1 of Schedule 2 sets out the matters that the Regulator must take into account in deciding, for the purposes of section 8 of the Act (financial sustainability requirement), whether it is satisfied that a Master Trust scheme is financially sustainable.

(2) Part 2 of Schedule 2 sets out the requirements to be met by a Master Trust scheme and each scheme funder relating to its financing.

Financial sustainability requirement: business plan

7.—(1) A Master Trust scheme's business plan must be submitted—

(a) in...

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