The past few years have seen a huge increase in the number of people investing for later life in Occupational Pension Schemes (OPS). Much of this growth is driven by increases in the membership of master trust schemes which account for the majority of members who have been automatically enrolled since 2012.

So, what is a master trust?

Very briefly, it’s a defined contribution, OPS which is set up under trust. Master Trusts are set up by a scheme funder, which is the company that provides financial support to the scheme.

The scheme’s aim is to provide a workplace pension that can be used by multiple unrelated employers. This contrasts with traditional OPS that are set up to provide a workplace pension for a single employer, or a group of employers that are part of the same group of companies.

While some master trusts have been set up to serve the automatic enrolment market, and small employers in particular, this isn’t the case for all master trusts. There’s a wide range of master trusts in the market and it’s likely there’s one suitable for most employers.


Since 2019 all master trusts have had to be authorised by the Pensions Regulator. The process saw the Regulator assess all master trusts against five key criteria:

  1. People running the scheme are fit and proper
  2. The scheme is financially sustainable
  3. The scheme funder is able to support the scheme
  4. The master trust has adequate systems and processes in place
  5. There’s a continuity strategy in place to deal with a range of events

The authorisation process was necessarily rigorous and saw the number of master trusts reduce by more than 50%. All master trusts are subject to individual supervision from the Pensions Regulator and must submit an annual supervisory return. The Pensions Regulator has the power to close down any master trust that fails to maintain the authorisation standard.

Scheme Trustees

All Occupational Pension Schemes are governed by a board of trustees and master trusts are no different. The trustees are jointly and individually liable for everything to do with the pension scheme. Their role is to make decisions about the pension scheme solely in the interests of the scheme members.

A master trust must have a minimum of three trustees (most have more) and the majority of board members must be completely independent of the scheme funder.


All OPS, including master trusts, are subject to the same legislation and need to comply with the Pensions Regulator’s Codes of Practice.

A master trust must carry out an annual value for money assessment, provide details of charges and net returns, and the work they have done to address environmental, social and governance risks in the same way as any other OPS. They must also produce a report, aligned with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), on how they identify, assess and manage climate related risks and opportunities in the same way as the very largest OPS.

Master trusts have the additional requirement to comply with the Regulator’s Code 15 and the Regulator can ask to see any documentary evidence they require to satisfy themselves that their high standards are being maintained.


OPS are not subject to the same Solvency II requirements or Financial Services Compensation Scheme protection as workplace personal pensions, unless the trustees choose to invest member funds with an insurer.

To make sure that member benefits are protected in a master trust, regulations were introduced that:

  • Require the scheme to produce a business plan detailing how it will become and remain financially stable
  • Require the trustees to have access to the funds required to run the scheme for up to two years (and in the worst-case wind it up) without recourse to any external source of income
  • Protect the value of members’ pension pots if the scheme winds up

These requirements, along with the funders’ finances, were tested as part of the authorisation process. Any deviation from the agreed plans must be communicated to the Pensions Regulator so that sustainability can be re-assessed.

Which master trust?

Master trusts provide employers and their employees with reassurance that their workplace pension is subject to rigorous trustee oversight. This, along with the relative ease with which the trustees can arrange a bulk transfer of assets, makes master trust an attractive proposition for employers with existing trust-based OPS in particular.

Authorisation provides additional comfort to all stakeholders around master trust governance and finances but not all master trusts are the same.

Some master trusts offer a one-size-fits-all route to compliance, others can offer a level of capability you might expect in a traditional OPS (for example, a bespoke fund range or communication strategy), or anything in between. An experienced adviser should be able to help you assess your needs and advise which master trust is right for you and your employees.

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