Hymans Robertson LLP is authorised and regulated

by the Financial Conduct Authority

11January 2017

The rise of the Master Trust – what’s all the fuss about?

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Speakers

Lee HollingworthPartner and Head of DC

Hymans Robertson

Sharon BellinghamSenior Consultant and

Head of Provider Relations

Hymans Robertson

Louise SivyerMaster Trust Policy Manager

The Pensions Regulator

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What we’ll cover today

• The story so far

• Regulating Master Trusts

• Suitability and the provider market

• Selecting a provider

• Your questions?

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The story so far…

• Growth explosion of Master Trusts and why‒ DC came of age

‒ Impact of auto-enrolment

• Attractive alternative to contract based GPP’s

• But…‒ No barriers to entry

‒ Conflicts of interest

‒ High risk of provider failure

• Consolidation expected and welcomed

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Master Trusts: objectives

• To maximise compliance with AE

• To protect the benefits of pension scheme members

• To promote good administration

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Regulating Master Trusts now

Areas to explore What we doWho we speak to

• Sustainability

• Process for

discontinuation

• Governance

• Sponsoring

employer/founder

• Operations

• The trustee

• Analysis

• Risk assessment

• Further engagement

• Master trust

assurance framework

• DC standards, inc

chair’s statementsOutcomes sought

• Understand market and risks

• Share best practice, improve processes

• Control exits

• compliance with AE

• protect member pots, maintain confidence

• balance burden

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The Pension Schemes Bill - Authorisation

• Essential aim of bill to require master trusts to be authorised.

• Key criteria to be met‒ Fit and proper persons running schemes

‒ Financial sustainability and business plan

‒ Scheme funder requirements

‒ Robust systems and processes

‒ Adequate continuity strategy

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The Pension Schemes Bill – TPR supervision

• Authorisation process

• Ongoing supervisory engagement‒ submit documents eg accounts and business plans

‒ supervisory return

‒ whistle-blowing

‒ significant events

• Backstop for critical events‒ triggering events

‒ plans, pauses, powers of directions, fines

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The Pension Schemes Bill – planned timetable

Oct 2016 2018/19April 2017 2017/18

Bill introduced

Retrospective

provisions

Triggering

events

Restrictions on

charges

The Pension

Schemes Act

2017

New information

gathering powers

Increased

powers triggering

event periods

Regulations

Codes and

Guidance

12 month

transitional

period

Authorisation

starts

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DC Delivery

Unbundled

Trust

In-house Outsourced

Bundled

Contract(Group Pension Plan)

Trust

Employer Trust Master Trust

Overview of DC Delivery

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Suitability of Master Trusts

Benefits Considerations

• Readymade governance overlay

• Time and cost efficiencies of outsourcing to

one provider

• Efficient method of transferring existing

assets from a trust based scheme

• Bundled pricing approach can help reduce

employer spend

• Rich member experience – provision of tools

and other support/ guidance

• Full control is relinquished

• Inflexibility of some proposition

• Lack of pricing transparency

• Think about the sustainability of

the provider

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The Provider Market

Traditional pension

providers

Auto Enrolment

providers

“New Venture”

Master Trusts

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Provider Assessment

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Questions

Lee Hollingworth: Lee.Hollingworth@hymans.co.uk, 020 7082 6324

Sharon Bellingham: Sharon.Bellingham@hymans.co.uk, 0121 210 4309

This presentation remains the property of Hymans Robertson

and The Pensions Regulator. The content of these slides

should not be reproduced without express permission.