What is a master trust pension?

It’s a type of workplace pension scheme that is set up by a scheme funder - this is a company that provides financial support to the scheme. It's governed by a single trustee board, but used by lots of employers. The employers are all unrelated to each other.

Master trust pensions usually have lower running costs, due to the shared responsibility of governance and administration, and how big the scheme is. They also come with the benefit of a trustee board, who have a legal duty to act in the best interests of the scheme members. All master trusts are set up as defined contribution pensions.

Since October 2018, all master trusts must be authorised by The Pensions Regulator. Like all workplace pension schemes, master trusts are regularly monitored to make sure they are working as they should. 

Master trusts are required to submit regular reports to the Pensions Regulator as part of their ongoing supervision and authorisation obligations.

Master trusts provide you, and your employees, with the reassurance that your workplace pension is subject to rigorous oversight by a trustee board. In addition, the inclusion of multiple employers results in the shared services reducing the cost of running the workplace pension scheme. Employers are choosing master trusts because they help meet auto-enrolment duties, and they’re scalable for growing businesses. 

If you’d like to learn more about why more employers are moving to master trusts, you can read our article on what’s driving the move to master trust.

There are a few key things we think you should consider before choosing a specific master trust as your pension scheme: 

• the investment strategy 
• charges and fees 
• retirement benefit options
• member communications 
• governance standards.

You’ll need to make sure you’re still making contributions into the scheme on time and provide the trustees with the correct employee data. 

If you're thinking about using a master trust pension scheme for your workplace pension, we recommend talking to a qualified financial adviser before you get started. The adviser may charge a fee for their service.