On the go: Master trusts still have “work to do” to improve their trustees’ investment knowledge, according to Geoff Cheetham, principal investment consultant at the Pensions Regulator.
Speaking at a webinar run by the regulator on Wednesday, Cheetham said that this was particularly in relation to some of the materials that TPR sees, although he added that this has been “improving quite markedly over the past few years”.
He noted that the increasingly complex investment market would not get any easier, and that the regulator expects to see the level of expertise grow from where it is now.
“There are still a large number of master trusts that don’t have investment committees or obvious investment knowledge within that governance framework, so we expect it to evolve a bit,” he added.
Despite that fact, Cheetham also noted that there were some very proficient trustee boards.
He also mentioned that membership profiles are evolving, so the investment strategies of master trusts would also need to evolve to reflect this.
Elsewhere, he added that there were “encouraging signs that scale is proving to be a catalyst for more innovation”.
Cheetham said this was with regard to the design of default strategies, which saw development in the use of alternatives, illiquids and derivatives.
TPR changed the way it regulates this industry with a new authorisation system introduced in 2018-19 that saw a market with more than 80 different providers shrink to 37 schemes at the end of the process, which came to a close in November 2019.
However, there is still consolidation movement in this area, with the majority of master trusts targeting defined contribution schemes in a bid to boost their assets under management, leading to heightened competition.
