The Pensions Regulator has announced that it has now authorised the final existing master trusts, bringing the total number of schemes which have met the new requirements to 37.

A "master trust scheme" is a multi-employer occupational scheme where each employer has its own division within the master arrangement. The Regulator has confirmed that that 50% of employees who have been automatically enrolled into a pension scheme are currently saving in a master trust. As we outlined in our March 2019 update, since 1 October 2018, these schemes have had to apply for authorisation, proving that they meet new tougher standards to continue operating in the market. As a result of these new requirements, the market has reduced in size by nearly 60%, from 90 schemes to 37 authorised master trusts.

The Regulator has confirmed that these 37 authorised master trust schemes will continue to be closely supervised to make sure they continue to operate within the law and that they will be expected to set an example for the rest of the pensions industry. For example, they will be expected to have their data in good order and ready for the Pensions Dashboards and to be at the forefront of considering climate change in their investments.

New master trusts setting up in the market will have to go through the authorisation process and satisfy the five authorisation criteria before opening for business. The criteria are as follows:

  1. That those involved in running the scheme are "fit and proper persons";
  2. That the scheme is financially sustainable;
  3. That the scheme funder meets certain requirements;
  4. That the scheme's systems and processes are sufficient to ensure that it is run effectively; and
  5. That the scheme has an adequate continuity strategy in place.The Regulator has indicated that one application from a new master trust has already been received and is being assessed.

We look forward to finding out whether master trust authorisation will be a topic for discussion at next week's APL Annual Conference in Edinburgh. If you're attending, look out for Maureen Burns and Jordan Halliday who will be representing Brodies.

If you would like to discuss anything raised in this blog, please get in touch with your usual Brodies contact.


Jennifer Crawford

Senior Associate