On the go: Trustees of some pension schemes may be in the dark over their status, potentially leading them to fall foul of master trust legislation that could close their scheme.
Master trusts have until March 31 to either apply for authorisation or trigger their exit from the market. After that date, master trusts that fail to either apply or trigger their exit will be breaking the law.
The Pensions Regulator is warning trustees to check if they fall under master trust legislation.
Nicola Parish, executive director for frontline regulation at the Pensions Regulator, said: “From April 2019, for schemes which already exist in the market and haven’t applied for authorisation, there is no appeal process, no opportunity to file an application – no other option than to wind up. We have been working with schemes we think meet the definition of a master trust, but trustees will always know their structure best, and it is their responsibility to check whether their scheme is a master trust.”
Ninety master trusts have been identified in the market. Only one, LifeSight, backed by Willis Towers Watson, has to date submitted its application, three have exited and 32 have triggered their exit, leaving 54 that either need to apply or trigger their exit in the next four months.
The regulator has launched a step-by-step guide for schemes to check if they are a master trust.
Any defined contribution scheme providing pensions for multiple and unconnected employers may be a master trust. A master trust is defined as an occupational pension scheme that:
provides money purchase benefits;
is used, or intended to be used, by two or more employers;
is not used, or intended to be used, only by employers that are connected with each other;
is not a relevant public service pension scheme.
A master trust may also be a group of schemes, none of which are already master trusts, providing money purchase benefits, where each scheme in the group is under ‘common control’ with other schemes in the group.
A defined benefit non-associated multi-employer scheme with small DC sections could fall under the master trust definition if the DC benefit is separate from the DB benefits.
Other schemes that come under the umbrella of master trust legislation could include a scheme where even just one employer does not belong to the same corporate group, or a hybrid industry-wide pension scheme set up under statute that still accepts new members or a group of single employer schemes that all use the same template rules and are run by the same trustee company.
