If you need evidence that master trusts have great governance, here it is
Recently, we’ve seen a number of concerns expressed about master trusts across certain sections of the media, in particular, how they are regulated and who can set one up. These are two important issues which we agree need to be discussed and addressed, both by the industry and the government. We welcome increased regulation and protection for savers, particularly when it comes to something as important as retirement.
That’s why, with these concerns in mind, it was great to see a new report from The Pensions Regulator (TPR) which has found that master trusts are consistently providing high-quality governance. The report found that when compared to other pension schemes, in a number of areas master trusts came out on top with regards to governance and compliance. Indeed, the report found that there was a correlation between scheme size and the proportion of standards being met. Half of master trusts confirmed they met at least 75% of the standards, compared to 25% of large, 31% of medium and 5% of small DC schemes. Note standards in this context refer to the legislative requirements, introduced in April 2015, that trustees of occupational pension schemes offering money purchase benefits must meet.
In addition, all master trusts reported that they were aware of the recently introduced DC code. Further evidence was apparent in the finding that 94% of master trusts (using a third party administrator) had a documented business continuity plan in place that they were satisfied with. Clearly, when it comes to awareness of governance, master trusts are standing head and shoulders above other schemes.
What’s more, with the introduction of auto-enrolment, millions more individuals have begun saving into a pension to ensure they are financially secure in retirement. Unsurprisingly, they want to be sure their investment is safe, being looked after, and is managed well. All master trusts surveyed were currently being used for auto-enrolment. Savers should therefore find the findings of the report comforting.
Hopefully, the report from TPR will go some way in dispelling some of the concerns that exist around master trusts – not least because many master trust providers have spent a considerable amount of time, resource, and investment in ensuring they are fully compliant. We aren’t saying that further legislation is unnecessary, but the finding that master trusts, many of which are only a few years old, are currently consistently ahead of single employer trusts in governance standards is reassuring.
Here at LifeSight, we take compliance and good governance incredibly seriously. That’s why last year we were pleased to be awarded the Pension Quality Mark (PQM) READY Standard and Master Trust Assurance Framework in recognition of our outstanding communications, good governance and robust processes. We are one of the few master trusts in the UK to be awarded both accreditations. LifeSight is independently governed by an excellent Trustee board and we offer members a high quality, engaging pension plan which really motivates people to get more involved with their savings.
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