Master Trusts

Master Trusts

A Master Trust is, put simply, a multi-employer occupational pension scheme (set up under a private trust). Master Trusts have been around for many decades but a new breed of Master Trust grew in number and popularity with the advent of auto enrolment in 2012. Around 10 million more savers were forecast to enter the workplace pensions market and Master Trusts offered a great solution.
For employers, the beauty of a Master Trust is a reduced governance burden compared to ‘in-house’ occupational pension trusts. Master Trusts can also offer better value for money compared to other alternatives such as Group Personal Pensions (GPPs). The pensions industry has leveraged its vast experience of pension provision to design some focused ways forward through Master Trusts, particularly in the DC environment.

A brave new world for Master Trusts

In 2017 The Pensions Regulator announced a new authorisation and supervisory regime for Master Trusts which saw some 45 Master Trusts exit the market – whether this was an intended consequence we may never know but it ultimately narrowed the market by over 50%.
The Pensions Regulator authorised 38 Master Trusts. Around a third of these are only available to certain employers as they are designed for particular industries or groups of employers. The other two-thirds are theoretically open to any employer and we refer to these as “Commercial Trusts”.  You can see a current list of the authorised “Commercial Master Trusts” here.
Employers now have peace of mind that all authorised Master Trusts are financially sound and being managed by people with the right skills and experience. But if you currently have an ‘in-house’ pension trust or a GPP how do you review your pensions strategy and make the move to a Master Trust? And how do you find the best fit for you?

Master Trusts for you, me, everybody

It can be daunting to think about your pensions strategy and how to choose the best pension scheme for your employees. With a wide range of options, there are many factors to consider. Have you thought about how hands-on you would like to be and what is important to you and your employees? You are making an important decision on behalf of your employees for a long time into the future.
All employers can now benefit from the innovations in technology, investments, and retirement options that Master Trusts have made. And there are potentially great commercial terms available too. There are Master Trusts available to suit all employers. However, not all Commercial Master Trusts are available to every employer, so the recommended first step is to get your requirements clear before you approach the market.

Choices, choices…

Any decision you make which involves company and employee money needs careful thought and attention. But once you have worked out your requirements, you can undertake a ‘sourcing’ exercise to find the best fit for you and your employees. a short-listing exercise will be required to narrow the market of 26 Commercial Master Trusts to those with the closest alignment to requirements. This is where expert guidance comes in.