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The Pensions Regulator (TPR) has recently announced an evolution in its approach to the supervision of master trusts. This shift in strategy will focus on three key areas:
- investments,
- data quality and standards, and
- innovation at retirement.
Master trusts are an important part of the UK’s pension provision, with a significant number of employers choosing these schemes for their employees. Recognising this, TPR has decided to evolve its supervisory approach to ensure these trusts continue to deliver value for savers – with value for money being a central theme for TPR in the last few months.
A Focus on Investments
TPR plans to probe and challenge master trusts more on how their approach to investments delivers for savers. This includes investigating how a master trust is seeking the best possible long-term risk-adjusted returns. TPR will also look more broadly at master trust investment governance practice and investment decision making.
Emphasising Data Quality and Standards
Data quality and standards is another area where TPR will be focusing its attention. High-quality data is crucial for the effective administration of pension schemes, and TPR will be requesting “deep dives” into master trusts’ systems to “really lift the bonnet” on how they operate.
Innovation at Retirement
The third area of focus is innovation at retirement. Master trusts have naturally focussed on accumulation to date (as they have only been in existence for ten years or so). But TPR wants to discuss how they help savers into and through retirement.
Comment
This evolution in TPR’s approach specifically for master trusts follows a series of restructuring announcements, headed by the February 2024 announcement (which we covered here), and then their corporate plan in May 2024 (which we covered here). It is a clear signal that TPR is committed to ensuring that master trusts continue to deliver value for savers. TPR says the evolution of supervision would see master trusts become the ‘gold standard’ for pension provision.
If you are considering a master trust for your employees/scheme members or would like to discuss any aspects of master trusts then please contact the authors or your usual contact in the Burges Salmon Pensions and Lifetime Savings Team.
This article was written by Callum Duckmanton and Chris Brown.
"...as many master trusts start their evolution towards becoming systemically important entities, and reflecting the volume of savers now within DC, we are rebalancing our focus...."
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