A closer look at what a Master Trust is


Last week we looked at Master Trusts in general. This week we look in more detail through some of the questions we have received.

What is a Master Trust?

A Master Trust is a defined contribution company pension scheme set up under trust. It differs from traditional Defined Contribution pension schemes in that multiple employers all coexist under the one trust deed, hence the term ‘master trust’.

Why Choose a Master Trust?

Companies who choose a Master Trust will enjoy all the benefits of an insurance provider’ pension expertise without the need to appoint their own trustee boards to manage the associated governance and compliance requirements. The Master Trust reduces effort in terms of time and cost while also removing the onerous trustee responsibilities which are increasing significantly due to IORP (Institutions for Occupational Retirement Provision) II. You will have a future-proofed employee pension by bringing expertise and dedication to scheme governance.

What is covered under the Master Trust?

The The key benefit of a Master Trust arrangement is that all trustee duties are carried out by a separate legal entity which has a trustee board of directors who are responsible for providing high quality scheme governance.  They follow a strict governance framework, and their responsibilities cover the key areas of scheme governance such as:

·       Reviewing investment performance and the schemes investment strategy.

·       Monitoring and reviewing the Registered Administrator performance.

·       Managing the trusts relationships with the Pensions Authority, Revenue, and the Finance Ombudsman.

·       Putting in place systems to avoid any conflicts.

How are employees’ funds managed in the trust? Most employees will choose what is called the scheme default investment strategy where the funds are invested based on age and date of retirement. Money is, over time, moved from high risk level funds to lower risk funds as retirement nears, eventually the investment  will be in very low risk or cash fund in the last years to shield against sudden market downturns. But for employees who want more involvement in their pension, the Master Trust will have a  wide range of  investment funds that will meet a varied range of member investment needs.

What technical and legal supports are available? With ever-changing legislation and a need for improved governance, there will be more demand on you and your business but the Master Trust will ensure you are up to date on all administration, regulatory and governance obligations.

How will my Company interact with the Master Trust? In the first instance your financial advisor will be the point of contact who will arrange the set-up of the scheme trust. When the scheme is in place most providers have on-line support systems which will be in place to make life easier. These on-line portals put you in control – providing all the information needed to manage the pension scheme, including scheme and payroll management information with ongoing support to HR and payroll teams. They will also oversee the production of investment performance and administration reports.

How will employees needs be managed? Again your financial adviser will be the first point of contact backed up with on-line systems through which employees will have access to interactive tools, calculators, and archives of relevant documentation allowing access to real time detailed information on all aspects of the pension including performance.

Where do we start? Contact your financial advisor who will assist in managing the initial scheme installation. On-line meetings can be set up to support and guide you; answering questions as they arise from you and your members. Workplace briefings, either group sessions or one-to one meetings can be arranged with marketing awareness campaigns set up specific to your needs to encourage active participation from employees.

Is there a member number limit attaching to this Master Trust? So far one provider will set up a scheme for 3 members but some need a minimum of 10. With all certain conditions will need to be met before set up is approved. It seems though that there will be “wiggle room” on a case by case basis initially.

Can our existing One-Man Schemes (OMS) be transferred to the new Master Trust? The general advice is stay put until the way is made clear as to how OMS’s in general are to be governed. Information will be forthcoming from the Pension Authority in the coming months. Should you have further questions or need more in-depth information and analysis of schemes currently in place give us a call.


086 8362633.



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