The Pensions Regulator (TPR), the UK’s watchdog for workplace pensions, has fined four trustees of a master trust for failing to promptly invest £1.4 million ($1.8 million) of its members’ savings for three years, affecting 9,081 plan participants
TRP fined the trustees of Salvus Master Trust a total of £5,000 for the problem—the maximum fine that could have been imposed.
“Pension schemes must collect and invest the contributions made by employers and employees,” Nicola Parish, executive director of frontline regulation at TPR, said in a release. “To have left so much money uninvested for this period of time is clearly unacceptable.”
In the UK, pension trustees are required by law to process and invest contributions from employers promptly and accurately, according to TPR. Otherwise trustees are breaking regulation 24 of the Occupational Pension Schemes Regulations 1996. This was TPR’s first penalty issued following a breach of this rule.
According to TPR’s regulatory intervention report, in January 2017 the trustees of Salvus Master Trust reported to TPR that there had been a failure to invest pension contributions received since 2014. Salvus blamed the problem on issues with its manual process for allocating contributions. The trustees also provided details of their plans to address both the failure to invest pension contributions, and ongoing administration problems with the pension.
TPR said the master trust cooperated with the regulator to address the problems, and to make sure all of the affected members were returned to the financial position they would have been in if the error had not occurred.
“Our engagement with Salvus has ensured that not only the thousands of members affected have not suffered any detriment, but also the master trust’s systems have been improved to stop this happening again,” said Parish.
In September 2017, TPR issued a penalty notice to the trustees of the plan who were active between April 6, 2015, when the regulation requiring trustees to process core financial transactions promptly and accurately came into force, and Oct. 17, 2016. TPR said it chose the timeframe because each penalized trustee had responsibility to comply with regulation 24 and took no action to rectify the breach.
New legislation for master trusts came into effect Oct. 1, which is intended to put safeguards on the plans to better protect members.
“Master trusts have to prove that they meet standards in five areas, including proving that they have adequate systems and processes,” said Parish. “We will continue to take tough action against schemes which do not meet their legal duties.”