Master trusts

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What are master trusts?

Master trusts are occupational pension schemes (other than a public service pension scheme) that are used, or intended to be used, by unconnected employers to provide pension benefits to their respective members.

Master trusts are not new—they originated in the 1950s when they were commonly related to a specific industry (eg the voluntary, printing and construction sectors) or specific geographic area. Several long-standing examples are available in the market. However, there has been a refocusing on this type of arrangement as a vehicle for auto-enrolment. For further information on auto-enrolment, see Practice Note: Auto-enrolment—an introduction.

Several definitions of master trusts were developed over time. The Pensions Regulator was the first to attempt to define master trusts. It did so in November 2013 when it published its first Code of Practice on defined contribution (DC) schemes. However, that definition was later dropped in favour of the term ‘relevant multi-employer scheme’ which was used in the Occupational Pension Schemes (Scheme Administration) Regulations 1996 (the Scheme Administration Regulations), SI 1996/1715 and is meant to include master trusts.

It was not

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Latest Pensions News

PDP survey finds FCA pension providers ready for dashboard connection

The Pensions Dashboards Programme (PDP) has published a statement reaffirming the government's commitment to delivering pensions dashboards and sharing survey insights from a sample of FCA-regulated pension providers. The survey indicates that most providers plan to connect to the dashboards ecosystem in line with official guidance and are confident in their ability to meet the connection requirements while maintaining their digital readiness. Although some providers may face initial challenges in meeting the voluntary deadlines, regulators have emphasised a flexible approach that avoids punitive measures, instead aiming to ensure that all providers eventually connect by 31 October 2026, thereby supporting improved retirement planning for individuals.

Police injury benefits: consultation outcome on 12-Month rule compatibility with statutory obligations published

The Home Office has published the consultation outcome on the subject of the 12-month rule in regulation 12 of the Police (Injury Benefit) Regulations 2006, SI 2006/932. Regulation 11 provides for the payment of injury awards for police officers who, as a result of injury received in the course of duty, have been permanently disabled and are unable to continue in the role. An injury award consists of a pension and a gratuity. Regulation 12 provides a significant additional gratuity for police officers who become totally and permanently disabled within 12 months of an injury. The additional gratuity is five times the annual value of the officer’s pensionable pay. The consultation, which ran between 12 May 2021 and 7 July 2021, examined the 12-month rule's compatibility with the Equality Act 2010, focusing on its impact on mental health injuries compared to physical injuries. Most respondents felt the 12-month rule was inconsistent with the Equality Act and did not adequately address progressive mental health conditions. However, there was no consensus among representative organisations, and the data collected was inconclusive. The Home Office therefore intends to gather more focused data and evidence through an engagement exercise with stakeholders and medical experts before considering any changes to regulation 12. However, if sufficient evidence and data support an amendment to regulation 12, the Home Office will consult further on any proposed changes.

Scheme did not have duty of care regarding member’s individual tax advice (Dr D, CAS-70911-G6X6)

Pensions analysis: In the determination of Dr D, CAS-70911-G6X6, the Pensions Ombudsman partially upheld a complaint by a member who incurred a large tax charge after withdrawing his entire pension benefits at age 75. As the member approached age 75, he failed to act on the scheme’s recommended options or to take tax advice and his funds were automatically switched to a cash fund at age 75. He then withdrew his entire benefits, resulting in the tax charge. The Ombudsman found that the scheme was not responsible for the tax consequences of the member's actions and so was not under a duty of care to advise the member on the tax consequences of withdrawing his entire pension at that stage. Martin Scott of gunnercooke LLP looks at the decision.

Lack of justifiable reason for trustee failure to reach unanimous consent on pension transfer (Mr N, CAS-49148-R5W6)

Pensions analysis: In the determination of Mr N (CAS-49148-R5W6), the Pensions Ombudsman has upheld a complaint about an incorrectly calculated transfer value which involved the underpayment of Mr N’s share of funds to another scheme. The trustees had a joint responsibility to ensure that the correct benefits were paid. The Ombudsman directed the trustees to rectify the situation by authorising the payment of the underpaid amount, together with interest, despite the repeated failure on the part of the trustees to reach the unanimous consent required to do so under the scheme’s rules. Martin Scott of gunnercooke LLP looks at the decision.

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