Master trusts provide a multi-employer occupational pension arrangement whereby each employer has its own segment within the master trust. There is one single legal entity with a single governance board (which is independent of the participating employers). This governance body typically has responsibility for investment options, service provision and communicating with the members.
There are a number of different master trust solutions in this new and growing market. Master trusts reduce the employer cost and governance burden of providing pension savings to employees, whilst still retaining the best advantages of a trust. In addition, the arrangement enables the members of the master trust to benefit from economies of scale through consolidated governance and advisers and cost pooling of investments
Each master trust scheme will vary but LifeSight provides a complete outsourcing solution including the following services:
- Independent governance including compliance with regulations, appointment of trustees, adapting to legislative changes and providing management information to employers.
- Full administration and communication services including member support via a range of channels, all statutory communications and implementation of a personalised member engagement strategy.
- Investment services including selection of investment funds and default strategies
- Transition services where clients can choose from a menu of options depending on their needs and budget.
- Post-retirement offerings including drawdown, lump sum and annuity options, supported by a guidance process to help members make informed decisions at the appropriate time for them.
At LifeSight, we understand the need to continually evolve our offering in order to stay at the forefront of the master trust market. We monitor member usage and have feedback channels for both employers and members, which we use to help develop our service offering continuously.
With an ever-increasing compliance burden and rapidly growing assets, particularly defined contribution (DC) assets, many companies (and some trustee boards) no longer have the resource, expertise or desire to carry on managing their own schemes. They are looking to master trusts in particular because they’re seen as a high quality, well-governed option.
Other reasons for considering master trusts include a need to reduce employer costs, a desire to improve member engagement levels with pensions and provide a more comprehensive communications experience, or a wish to reshape the pension arrangements, for example, by transferring tranches of legacy deferred members or set up a new DC scheme.
- An entirely independent trustee board comprised of experienced industry professionals aligned to members’ interests and committed to the highest standards of governance, as evidenced by our PQM Ready and Master Trust Assurance Framework industry accreditations.
- Market-leading administration services that are provided entirely in-house and are highly automated and efficient.
- Cutting-edge member engagement concepts including intuitive modelling tools that work across diverse populations, and a personalised, innovative approach to communication that reacts to how often and in what way a member interacts with LifeSight.
- Low-cost, high-performing investment options for members, developed using the latest innovative thinking from our specialist teams.
- Wider benefits platform capability including elements such as corporate or Lifetime ISAs and health benefits.
Yes – fully flexible income drawdown is available to all LifeSight members. The service allows members to withdraw their savings as and when they need to, with comprehensive ongoing support and tools to help them choose investments and make their money last as long as they need it to.
Generally speaking, master trust members meet the running costs of the scheme. This is levied as a basis point charge on funds under management.
The LifeSight fund range has been designed to provide excellent value for money for members, offering diversification of asset classes, implemented on a passive basis to deliver higher expected returns at a lower cost (relative to simpler structures) for each unit of risk. Diversified growth options are a key part of the investment solution as they are capable of delivering growth for members but with lower volatility.
The master trust onboarding process typically takes about 6-12 months depending on the extent of the pre-transition work required, including the potential need for consultation between the sponsoring employer, trustees and employees.
We have established links with the range of professional bodies that cover our activities and participate actively in the following organisations:
The Pension Quality Mark (PQM) is the highest standard of excellence available to UK employers to demonstrate the benefits of their pension offering.
The Pensions and Lifetime Savings Association is a national association with a 90-year history of helping pension professionals run better pension schemes.
The Pensions Regulator is the UK regulator of work-based pension schemes, who work with trustees, employers, pension specialists and business advisers, giving guidance on what is expected of them.