Master trusts need to have control procedures in place to ensure that governance and administration arrangements work properly.

In May 2016, the Work and Pensions Select Committee described master trusts as a “good fit” with auto-enrollment because they provide the “ongoing oversight of investments provided by a trustee board at lower operating costs than single employer schemes, through economies of scale from pooling administrative functions”.

However it still called for stronger regulations, and earlier this year the Pensions Regulator issued its first fines against master trust scheme operators for governance failings, after identifying a number of cases where a chair’s statement had not been completed.

Getting the fundamentals right is critical.  Raising the standard of master trusts is key to ensuring members receive an appropriate service from their scheme providers, especially given the increase in master trust uptake due to the onset of auto-enrolment.

Preventing poorly run master trusts

Fines are all well and good, but there are still a host of master trust providers who are simply not up to speed with provision of a scheme to ensure maximum benefit to the members.

However, the Pensions Schemes Act 2017 is setting out legislation to make sure master trusts apply to the Pensions Regulator to maintain a satisfactory level of standards of pension provision.

This will raise the bar, giving master trust providers 2 choices:

  • To refine operating processes and governance to protect the members’ benefits, or
  • To transfer member schemes to another master trust provider.

It is likely we will see the poorer performing providers taking the second option, resulting in market consolidation.

Sustainable pension arrangements are vital for members as they will spend the majority of their lifetime with this pension arrangement in place.  Trust, transparency and communication are key to giving members the right platform on which to build their pension scheme.

In our latest video, our Director of Operations Jessica Rigby highlights further details about the issues being faced and how BlueSky can help ensure that master trusts properly support their members.

To learn more about how BlueSky  can assist you with workplace pensions, get in touch today. Call us on 01322 308 249 or visit our contact page to speak with a member of our expert team.

To learn more about how BlueSky  can assist you with workplace pensions, get in touch today. Call us on 01322 308 249 or visit our contact page to speak with a member of our expert team.