Clauses 21 and 22 are the first in a series that extend what happens when a master trust experiences a triggering event, which I mentioned earlier. To remind members of the Committee, a triggering event could put a master trust scheme at future risk. The aim of the next series of clauses is to increase the level of oversight by the regulator during the triggering event period and to mitigate the risk to members and employers.
The provisions also intend to cover the way in which the situation is resolved, ensuring that it is supportive of a member’s continued saving in a pension scheme and of an employer’s automatic enrolment duties. The measures take account of the fact that there is likely to be a lower level of employer engagement in or influence over the running of the scheme, and the complexity of addressing the situation when there are multiple employers who also have automatic enrolment duties to fulfil.
Clause 21 sets out that, following a triggering event, trustees are obliged to comply with the requirements set out in subsequent clauses. They must notify the regulator of certain triggering events; decide which continuity option to pursue, where they have a choice; and prepare an implementation strategy and secure the regulator’s approval to it. The implementation strategy must set out how the interests of scheme members will be protected.
Clause 22 sets out what the triggering events are and when the triggering event period starts and finishes. It contains a table that lists the 10 triggering events and the dates on which each of them occurs. The triggering events are the key risk events that may arise in the life cycle of a master trust scheme under the authorisation regime. They reflect the different structures and circumstances of such schemes, in comparison with more traditional employer-sponsored occupation schemes.
Clause 22 also explains when the master trust enters a triggering event period. It states that this period lasts until
“the date on which the scheme is wound up…the date on which the trustees receive notification from the Pensions Regulator that the Regulator is satisfied that the triggering event has been resolved”,
“the date on which it becomes clear that authorisation is not to be withdrawn”.
Subsequent clauses set out how the scheme is to be subject to increased scrutiny requirements during the triggering event period. They also provide additional powers for the regulator, so that members are protected from the specific risks that may arise in the triggering event period, and support the orderly or managed exit of schemes when they ultimately move to closure.
It is essential to ensure that the authorisation regime can cater for closer supervision when triggering events occur. Legislation therefore has to set out clearly what those risk events are, the dates on which they are taken to start and finish, and consequent requirements. That is what the clauses achieve, in conjunction with subsequent clauses in the Bill.
“a body corporate or a partnership that is a legal person”.
However, item 5 in the table of triggering events listed in clause 22(6) interprets a scheme funder slightly differently, as
“a person or body of a kind that meets requirements prescribed under…the Pensions Act 2004”.
I am concerned that we have agreed to an amendment that exempts individual persons, but there seems to be a slightly different interpretation of what the scheme funder is in the table of triggering events. It may just be an oversight, but some clarification would be helpful.
I will get back to my hon. Friend on that very technical point, but I do not believe that there is any intention for the definition to be different.