Ten defined contribution master trusts could be liable for 25 per cent of the general levy going forward, despite only holding two per cent of assets, according to The People’s Pension (TPP).

The general levy is calculated per pension pot, which can leave master trusts footing a disproportionate share of the bill as their memberships often include millions of lower earners who have small and/or multiple pension pots due to auto-enrolment.

The levy is on workplace and personal pension schemes to recover funding provided by the Department for Work and Pensions (DWP) to The Pensions Regulator, The Pensions Ombudsman and the Money and Pensions Service.

According to TPP, itself would pay nearly 7 per cent of the total general levy by 2020/21, despite having assets of just £8bn.

By comparison, the largest pension scheme in the UK has assets of £60bn and 450,000 members, and would therefore pay around £390,000, while TPP, which has 4.7 million members, would have to pay £2.9m.

The government has just finished consulting on changed to the general levy, and if it imposes the proposed increases, TPP’s bill could rise by 245 per cent in three years.

“The General Levy is no longer fit for purpose,” said TPP director of policy and PLSA chair of the master trust committee, Gregg McClymont.

“The per member structure made sense in a world of long- term employment, where a smaller proportion of the workforce had access to workplace pension saving.

“But auto-enrolment is a small pot-creation machine, because it’s, rightfully, brought in a new group of people with lower earnings who move from job to job much more frequently. It’s completely unfair that these savers carry the heaviest regulatory burden, with master trusts paying the highest cost.

“The government’s latest proposals would see these already unfair costs rise exponentially, with many providers left with little choice but to pass the cost directly on to their membership.

“The burden of levy payments carried by schemes with many members but few assets is perverse. We’re calling for an immediate review of the structure of the Levy and believe that for transparency purposes the government should provide a breakdown of regulatory costs by pensions sector.”

The ten master trusts that would pay 25 per cent of the levy, according to TPP, would be Nest, Now Pensions, Smart Pension, The People’s Pension, LGIM, Lifesight, Cheviot, Mercer, National Pension Trust and TPT Retirement Solutions.

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