Master trusts—an introduction
Produced in partnership with Peter Coyne & Kirsten Thompson of CMS
Master trusts—an introduction

The following Pensions guidance note Produced in partnership with Peter Coyne & Kirsten Thompson of CMS provides comprehensive and up to date legal information covering:

  • Master trusts—an introduction
  • What are master trusts?
  • Use of master trusts for auto-enrolment purposes
  • Advantages of master trusts
  • What do master trusts look like?
  • Trustee requirements
  • Governance of master trusts
  • First wave of governance regulation (2013–2015)
  • Second wave of governance regulation (2016 and beyond): authorisation and supervisory regime

This Practice Note is a general introduction to master trust schemes, covering among other things the advantages of using such pension schemes, their typical structure and governing documentation, the position of the trustees of such schemes and relevant governance issues.

For information specific to the authorisation and supervisory regime applicable to master trusts from 1 October 2018, see Practice Note: The authorisation and supervisory regime for master trusts.

What are master trusts?

Several definitions of master trusts were developed over time.

Early definition by the Pensions Regulator

The Pensions Regulator was the first to attempt to define master trusts. It did so in November 2013 when it published its first Code of Practice on defined contribution (DC) schemes. The Code of Practice described master trusts as trust-based occupational pension schemes (for the purposes of section 1 of the Pension Schemes Act 1993 (PSA 1993)) that are:

  1. established by a product provider

  2. for the benefit of a number of non-associated employers, and

  3. where each employer is not included in its own segregated section with its own trustees

For the purpose of this definition, employers were considered to be associated if they were part of the same corporate group. This would have included partially-owned subsidiaries and joint ventures.

However, when the DC Code of Practice was updated in July 2016, the Pensions Regulator decided to