26 November 2019
Earlier this year, The Pensions Administration Standards Association (PASA), the
independent body dedicated to driving up standards in pensions administration, invited key
individuals from across the industry with wide ranging DC expertise to work together to
provide guidance around master trusts – creating the Master Trust Transition Working Group
(MTTWG). Today the MTTWG has published its first guidance on DC Master Trust
Transition. Transitions of members to and from DC master trusts could happen for many different reasons, but the guidance focuses on the two most common scenarios:
▪ Master trust to master trust where ‘Continuity Option One’ is being followed
▪ Single employer DC trusts to master trust
David Porter Chair of MTTWG commented: “Auto enrolment led to a surge in new DC
master trusts. Concerns about how they would all provide good outcomes for members led to
a raft of new of regulation such as the Pensions Regulator’s (TPR) authorisation regime and
ongoing supervision being put in place to safeguard member savings.
“As a result, these DC master trusts have a high standard to meet, and rightly so. They must
ensure high governance benchmarks and new financial reserving requirements. Beyond
financial and operational aspects there are also requirements around how one DC master trust
transitions to another. This is central to our guidance.”
Tracy Weller, Board Sponsor to the MTTWG, acknowledges this and commented: “The pace
of consolidation continues to build, even more so now with a positive nudge from the TPR
for market consolidation and for underperforming DC schemes to consider moving to DC
master trusts. Once we’re in a post authorisation environment, market dynamics will also
come into play. More individual employers are likely to move between these DC master
trusts and more single employer DC schemes will transition to one of the authorised master
trusts. Our guidance will support trustees and the wider industry as the market continues to
change, evolve and consolidate.”
The Pensions Regulator said: “We welcome PASA’s guidance which sets out the practical
steps trustees and administrators should take to protect savers when managing a transfer.
Authorisation is putting safeguards around master trusts, giving reassurance to trustees of
both exiting master trusts and consolidating single-employer DC schemes transferring their
members into these schemes. Prioritising data as well as putting savers and employers at the
heart, including keeping them informed, is key to a successful transfer and continuing
confidence in pensions.”
To view the full checklist, click here.
