Master Trusts Q&A

Who are the Master Trust Providers?

There are officially 38 Master Trusts authorised by The Pensions Regulator. However we have classified around 25 as “Commercial” Master Trusts available, in theory, to any employer. The list can be found on our website page Master Trust providers.

What should I look for in a Master Trust?

There are Master Trusts to suit all employers, but not all Master Trusts are available to all employers. As a first step, you should set out your requirements. Do you want to be hands-on or hands-off? How important is technology to you? What about sustainable (or ESG) investment policies? Once you have worked out your requirements you will be able to narrow the market and we can help if you need a hand.

What is meant by a ‘not for profit’ Master Trust?

Some Master Trusts are labelled ‘not for profit’. Often people perceive ‘not for profit’ to mean that an organisation or service is cheaper, because it is not making money. A ‘not for profit’ Master Trust may offer better value for money, but it does not mean it is not making a profit. Profits made by a ‘not for profit’ Master Trust are reinvested into the Master Trust, for example for product development. ‘Not for profit’ Master Trusts typically do not have shareholders that they need to return profits to in the way of dividends.

Does it matter which Master Trust I choose now that authorisation is required by The Pensions Regulator?

TPR has set out certain requirements to obtain authorisation as ‘fit and proper’ Master Trusts. This is a great validation across many key aspects. However, there are still many differentiators across the market. The quality of communications, the technology available for members and the employer, the investment options and the Trustee governance models all vary. Setting out your requirements will help you decide which Master Trust is the best fit for you. Consider a brainstorm with all stakeholders represented and use experts to support and guide.

Why choose a Master Trust over an occupational DC scheme or a Group Personal Pension (GPP)?

Master Trusts offer a reduced governance burden for employers. Some offer different governance options where the employer can choose the level of involvement. Compared to a GPP, Master Trusts can offer stronger governance particularly in terms of investment monitoring. Master Trusts can also be better value for money compared to some alternatives.

How difficult is it to transition to a Master Trust?

There is no doubt that transitioning is still a complex activity. Although things have become easier since TPR authorisation, much planning and attention to detail is still required.
There are many aspects which will vary with specific circumstances. However, the main areas where care is needed are generally around legal considerations, employee consutation, data conversion complexities, and investment considerations. These all have a myriad of issues to work through and devil is often in the detail. Seek advice and don’t assume that providers have always got the data right in the past, a data audit may be a good governance start point.

How long does it take to transition to a Master Trust?

The first step is to choose your Master Trust (assuming a non-regulated transfer (or new Master Trust for a Regulated transfer). This is a specialist procurement exercise in its own right and the transition cannot start until a preferred supplier contract is all but signed. Ideally, the procurement exercise will have resolved many of the transition queries. Certainly applying some foresight during this process will help considerably.
The actual transition will vary depending on complexity and any issues such as data cleanliness. However, four to six months should be a reasonable estimate – any less may risk compromising quality and any more suggests that the preliminaries may not have been fully completed (except in very large-scale complex scenarios).

How much work / effort is required to transition successfully?

A properly managed transition will require a team effort to deliver the various specialist aspects. Multiple workstreams will be required, often running in parallel. The effort should not be underestimated – just monitoring the moving parts through a proper project plan will likely require a dedicated person throughout. A properly scoped and resourced project plan, ideally compiled during the preliminary stages, should avoid the risks of lack of resources to complete on time.

I am setting up a new business, can a Master Trust help me with auto-enrolment?

In short, yes. Some Master Trusts will require a minimum number of employees but there are certainly Master Trusts available who specifically target start-ups and offer a full range of support to help you comply with auto-enrolment requirements. Make sure you set this out in your requirements to ensure you get the level of support that you need.