Master Trusts are the hottest ticket in town in the DC world at the moment, with their growth fuelled by their attraction as vehicles for consolidation , as a result of the Pensions Regulator’s ever-increasing focus on DC governance.

But with many more than 50 Master Trusts in the market and new ‘Authorisation’ requirements on their way plus a real potential for loss of control, deciding whether a Master Trust is the right option and if so which one to select is not to be taken lightly.

Isinglass have vast experience of all aspects of considering, selecting and implementing master trusts.

Initial considerations

Initial Considerations

There are many areas that need to be taken into account when considering a move to a Master Trust. Isinglass can help employers give careful consideration to their needs and of the specific circumstances of the existing arrangement.

A good starting point is a clear area by area comparison of the features of Master Trusts and the current arrangement. This can help to educate all of those who need to be involved in the decision-making process particularly those whose day job is not pensions. This can cover areas such as:

  • governance structure
  • investment options
  • member communications
  • death benefits
  • costs and expenses
  • at retirement benefits, etc
Legal and implementation considerations

Legal and implementation considerations
Before significant time is spent on a provider selection, Isinglass strongly recommend that consideration be given to the practical requirements of implementing a Master Trust and, if there are any impediments in the existing Scheme rules which will make such an implementation and subsequent transfer of DC funds problematic, how these can be addressed.This would cover areas such as

  • The employer’s ability to cease and redirect contributions and whether this triggers a windup of the existing scheme
  • Interaction with Auto-enrolment requirements,
  • Whether the Trustees have sufficiently flexible powers to make a bulk transfer
  • How future death-in-service and ill-health benefits can be dealt with
  • Likely employee consultation requirements
Provider selection

Provider selection

The Master Trust market has seen a rapid growth in providers in the last few years but is now set for perhaps and even more rapid contraction as a result of the forthcoming ‘ Authorisation ’ requirements.

Master Trusts offer many different propositions , charging approaches, levels of quality and sustainability from which to choose. So, picking the right master trust has never been more important.

Isinglass can help you to agree and prioritise any specific requirements that you may have and will then incorporate these into a wider set of selection criteria which might cover areas such as:

  • Investment options
  • Quality of administration
  • Member communications
  • At retirement options
  • Reputation /brand of the provider etc.

Isinglass will then recommend a shortlist of providers to which a detailed RFP can be sent. The responses to the RFP are then analysed against the selection criteria and summarised for the selection committee.

Isinglass can then organise and run a beauty parade or site visits.

Implementation

Implementation

This would normally be in two steps.

Firstly, formal notice of ceasing contributions to the current scheme would be given, employees enrolled into the Master Trust and payment of future contributions started.

Secondly, there would be bulk transfer of existing DC assets from the current scheme to the Master Trust. Isinglass can assist the Trustees in their detailed consideration of the merits of the transfer for members.

Following the transfer, it may be necessary or sensible to wind-up the current scheme or its DC section. Isinglass can provide project management and advice in this area also.