How to demonstrate control over Master Trusts

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The UK’s Pension Schemes Act 2017 and Occupational Pension Schemes (Master Trusts) Regulations 2018 introduced the concept of a master trust.

Under the legislation, firms had to identify whether their pension scheme fell within the definition. Where this was the case, they then needed to seek authorisation from The Pension Regulator. The alternatives being to windup the scheme or face a penalty for operating illegally.

What is a master trust?

A master trust is 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 which are connected with each other
  • is not a public service pension scheme 

Cluster Schemes would also fall within the definition of a master trust. This is where a group of schemes, none of which are master trusts, provide money purchase benefits, and where each scheme in the group is under 'common control' with other schemes in the group.

The obligation to be authorised also brought additional requirements. Authorised master trusts must have the following in place to safeguard and protect its members:
  1. people
  2. systems and processes
  3. continuity plans
  4. financial support 


Supervision falls within the remit of The Pensions Regulator (TPR), who provide guidance to the master trusts. Not surprisingly, the level of supervision is determined by risks posed by a master trust. This assessment is based on a few factors including:

  • the current and anticipated risks of the master trust, including the scale and complexity of the master trust
  • information gathered during authorisation, supervision and any enforcement activity, the master trust’s track record in meeting their obligations, as well as member and employer experience
  • the level of openness, honesty and proactivity demonstrated by the master trust
  • industry and market developments, including changes in legislation and product innovation 

TPR monitors the risks and issues associated with master trusts. This includes understanding the likelihood and impact these risks and issues would have on the wider market. 

Demonstrating oversight:

Those responsible for running the master trust must have appropriate systems and controls in place. Management need to have appropriate evidence in place to demonstrate that risks posed are understood and managed. This requires ongoing monitoring and collation of data to demonstrate risk management. Given the nature of the master trust, collating data from a number of schemes needs to be managed efficiently and securely. 

Firms need to consider the evidence to demonstrate control and rationale for key decisions. For example, this may include: 

  • Minutes from management meetings
  • Reports with timely, accurate and relevant data provided to management
  • Current organisation structure demonstrating clear reporting lines and escalation points
  • Documented policies and procedure
  • Reporting from control functions, e.g. compliance, risk management and internal audit
  • Feedback from members and employer experience, such as survey or volume of complaints
In order to demonstrate the above, it isn’t a question of simply gathering documents. The master trusts need to have the right level of resources to manage its operations and monitor the effectiveness of controls. This helps to demonstrate trustee oversight.

Where it gathers information from various sources, accuracy, consistency and timeliness of data is a necessity. This helps to provide management with a complete and accurate picture. In turn this enables early identification of any issues and a speedy response to resolve issues, if required.

How Ruleguard can help you:

Ruleguard is an industry-leading software platform designed to help regulated firms manage the burden of evidencing and monitoring compliance. It has a range of tools to help firms fulfil their obligations across the UK, Europe and APAC regions.

The Ruleguard system allows you to map received information into your own data, letting you incorporate third-party regulatory information into your own risk or monitoring frameworks. https://www.ruleguard.com/third-party-oversight

Get in touch with the Ruleguard team to learn more on: 020 3965 2166 or hello@ruleguard.com


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Head of Client Regulation| Ruleguard