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.
A master trust is an occupational pension scheme that:
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.
Supervision:
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:
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:
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