Smart Pension has absorbed more than 6,500 members from the Corporate Pensions Trust (CPT) after its trustees decided not to apply for authorisation.
The deal with the scheme’s sponsor, Lighthouse, was agreed earlier this month after a market review of CPT following the launch of The Pensions Regulator’s (TPR) authorisation regime last October.
Under the regime, master trusts will need to apply for authorisation by the end of March, or wind up and transfer members to an authorised scheme.
Smart Pension – which manages assets of around £200m – is expected to take on CPT’s £12.5m aggregate funds under management in May, if it receives authorisation.
Lighthouse said the decision to wind up and transfer members was taken because the new regime would “significantly increase the annual running costs, both in the year of initial application for authorisation and in all subsequent years, as well as the capital required to be held to meet any future wind up costs”.
Smart Pension director of business development Paul Budgen told RP’s sister title PP that that the master trust wants to be very clear that this deal is a “partnership” and that the firm “still wants to maintain client relationships”.
He added that Smart Pension is also in conversations about the potential consolidation of half a dozen other master trusts.
“We are also absolutely interested in other single-employer trusts,” he said. “I’ve been clear that governance should be a competitive advantage in pension schemes and I know, having spoken to single-employer trusts, that this type of arrangement is beneficial to them.”
He also confirmed that Smart Pension’s authorisation application is in the last stages and will be submitted to TPR “imminently”, but could not provide an exact date.
Lighthouse chief executive Malcolm Streatfield said: “The transfers, once [Smart Pension] has been approved by TPR, will provide a well-backed and market-leading home for those employers and members who have previously chosen to use the CPT to meet their auto-enrolment obligations.”
He added it will also enable Lighthouse to concentrate on its advice business.
The deal is the latest example of consolidation of master trusts as the market shrinks following the launch of the authorisation regime. Last month, Crystal Trust welcomed 35,000 members from The Open Pension Trust, absorbing £33m of members’ assets.
Also last year, Salvus Master Trust absorbed the £7m Complete Master Trust, while The People’s Pension took on members from Your Workplace Pension.