Master Trusts

If you’re looking to acquire or consolidate into another scheme or simply want to enrich your data – we can help.

Particular challenges

The popularity of master trusts in the DC pensions market has grown considerably over the last few years, particularly with the advent of auto-enrolment. But despite many large schemes being newer to the market, master trusts do not come without their data challenges.

 

According to research we conducted last year, 92% of master trusts were being used for auto enrolment purposes with a huge majority accepting employers of all sizes. You can read the full report here. On a daily basis, hundreds of thousands of member data records are being shared between employers and their pension scheme. Your scheme must constantly keep up with changes in personal details, employment details, earnings and contribution levels. You’re also likely to be receiving individual record updates from members themselves or may be receiving data directly from payroll. This creates a mixing pot where discrepancies between employer records and those which you hold are rife. Strong validation processes are vital when it comes to the source of data.

 

An added challenge comes from transient workforces, where employees regularly move from company to company – something which is not uncommon in many industries. Your data may have to keep up with frequent changes, as well as matching new employer records to existing members to avoid duplication.

 

There is an increased focus on the way a pension scheme manages data, to ensure compliance with The Pensions Regulator’s record keeping requirements and Code of Practice 15, to put your pension scheme in good stead for ongoing supervision once your master trust is authorised and pensions dashboard too. Good record keeping data scores can also be used to demonstrate good governance practices – enticing new business.

Master trust authorisation

With the increase in popularity and the growing size of many master trusts, the requirement to be authorised to continue to operate as a master trust was introduced by The Pension Schemes Act 2017 and set down by the Occupational Pension Schemes (Master Trusts) Regulations 2018.  The aim is to reduce risk to members should their scheme fail. Master trusts could do this by improving and streamlining their governance structure, ensuring they are managed by trustees and scheme managers who are ‘fit and proper’ and by ensuring their controls and processes are sufficient to run the trust effectively.

 

Master trusts needed to apply for authorisation (or a 6-week extension period) by 31 March 2019. 39 master trusts submitted applications to The Pensions Regulator, and so far 34 master trusts have been authorised. It’s a period of great change in what has been a calm, if a somewhat busy DC market.

Looking to exit the market?

Master trusts have had to make the decision to either apply for authorisation or not. If your master trust has decided not to apply for authorisation or has been declined authorisation a ‘triggering event’ occurs. Master trusts will then need to follow continuity option one:

 

Trustees must transfer all members out of the scheme and then take actions to ensure the scheme is wound up.

How we can help

We can help you maximise the value when winding up. Whether you’re looking towards the orderly transfer route or to merge with another scheme you’ll need to ensure you have a well-planned, streamlined method. Without proper understanding, planning and execution it can become overly complicated – and any agreed value on acquisition can dissipate through the migration and due diligence process.

 

We can help by getting your data and processes in good shape, ready for the receiving scheme. We have the technology in place to help with migration too, with data mapping, analysis and reconciliation tools we can help you create an organised migration plan.

 

If you’re looking for more details regarding continuity option one and two you might like to read The Pension Regulators guidance »

MT consolidation

With master trust authorisation it creates a market ripe for secondary acquisition – absorbing master trusts which can no longer operate or providing a scheme with strong governance to entice other schemes, like single employer DC trusts and section 32 buyouts.

Absorbing another master trust

When looking to take over another master trust or a single employer DC trust, the quality of data should form part of your analysis. An in-depth data audit should help you determine the level of the ceding schemes data quality, and can guide you in assessing the quality of processes, and ultimately the value of the acquisition.

How we can help

We can help you independently assess the value of the master trust by carrying out a full data audit, analysis, gap analysis, cleanse and finally migration.

Section 32 buyout

When a master trust is looking towards absorbing a section 32 buyout there are additional data requirements to consider. Commonly section 32 buyout schemes hold data which was captured many years ago, which may make it difficult to trace members. Adding to this, there may well be additional requirements on schemes to provide a GMP equalised pension.

How we can help

When acquiring a section 32, we can help you analyse the quality of data, the ease of migration and the depth of cleansing required. We’ve developed our technology to integrate with older legacy systems, mapping data and providing an accurate analysis and audit – this can help you calculate the value of the acquisition. Once you’ve decided to proceed, we can map this data into your own administration systems.

Data migration

Whether you’re looking to exit the master trust market, or are looking towards opportunities to acquire other schemes, data migration should be at the forefront of your mind. A trustees responsibility is towards its members, so ensuring the secure, accurate, timely transfer of member records is key.

How we can help

We’re specialist in independent data analysis and migration – we’re not tied to day-to-day administration so can provide an impartial review. We’ve developed technology to audit and map a schemes’ data, and we continually build on this to create a seamless experience. For you, this provides peace of mind – you can accurately assess the quality of data from the ceding scheme whilst we develop a data migration plan.

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