Now Pensions has been forced by The Pensions Regulator to overhaul its administration system, after it emerged that the master trust had failed to collect an estimated £18m in pension contributions.
Evidence collected by the regulator found “serious and persistent” administrative failings at Now Pensions, which left one in three members pension contributions unpaid, affecting over 265,000 people.
The failings, which dated back to April 2016, led TPR to issue an Improvement Notice and third Party Notice, respectively.
TPR executive director of frontline regulation, Nicola Parish, commented: “When we launched our investigation into Now Pensions, the master trust had significant administration problems in the way it was handling data.
“In particular, its failure to collect contributions was causing problems for employers and the pension pots of members were not growing as they should have been. This was unacceptable.
“Pension schemes, including master trusts, should be in no doubt that we will act if we become concerned about the way they are being run. We will not accept failings that put members’ savings at risk.”
According to TPR, Now Pensions has taken “all reasonable steps” to comply with the notices, working closely with employers to collect outstanding contributions, improved data and shifted members onto a purpose-built platform.
Now Pensions has also pledged to compensate members with any losses suffered by the failure.
In November 2017, TPR fined the trustee £50,000 and a further £20,000 in January 2018 for failing to properly inform members.
Now Pensions CEO, Troy Clutterbuck, said: “I am grateful to employers for their help and co-operation as NPL has carried out this complex work and I am sorry for the length of time it’s taken to put things right.
“As one of the largest auto enrolment providers, I am acutely aware of the important role we play in supporting people with their retirement savings.
“We have made fundamental changes throughout our business to improve our operations and remain fully committed to the auto-enrolment market."
Master trusts now have two months to apply for authorisation.
Last week, Now Pensions blamed trustees’ decision to currency hedge for its poor investment returns, after facing an awkward line of questioning from the Work and Pensions Select Committee.
Giving evidence on the progress of auto-enrolment in front of the Committee, Now Pensions director of policy, Adrian Boulding, was forced to defend his scheme's returns after Conservative MP for Amber Valley, Nigel Mills, singled out the provider.
Subscribe to our newsletter to receive breaking news by email.