PASA releases updated master trust transition guidance

The Pensions Administration Standards Association (PASA) has released updated master trust transition guidance, designed for situations involving transitions of savers to and from master trusts.

PASA said that with defined contribution (DC) master trusts being firmly established as a mainstream pension vehicle for millions, they have come under much greater focus.

It also argued that economies of scale have meant consolidation has remained a constant, encouraged by The Pensions Regulation (TPR) through its belief of ‘bigger is better’ and regulation driving underperforming DC schemes into master trusts.

Given this, it suggested that as consolidation continues, it is "imperative" that transitions follow the prescriptive legislation and industry best practice.

Whilst this transition could happen for many different reasons, the PASA guidance focuses on the two most common scenarios of transition, which are master trust to master trust and single employer trust to master trust.

It also assumes the transition does not involve a distressed situation or an imposed wind-up of the ceding scheme and the receiving scheme has been selected after due diligence.

Commenting on the guidance, PASA working group chair, David Porter, said: “The original version of this guidance was issued in November 2019 and has been updated for 2024.

“Master trusts have developed in the intervening years, but the process and considerations remain essentially the same.”

In particular, the guidance said that all trustees should be aware of their obligation to deliver good DC scheme outcomes through robust governance, high-quality administration and service, investment diversification and value for money.

However, PASA warned that if they’re unable to achieve these outcomes, trustees may need to consider whether they’re still able to offer value for savers, or whether they could be better served in a larger well-run alternative.

PASA also argued that it is imperative any master trust exit is orderly and occurs to the prescribed legislative requirements.

Whilst master trusts failing to meet these "stringent" requirements are no longer permitted to operate and must make alternative arrangements for their savers, PASA argued that it is "imperative" any master trust exit is orderly and occurs to the prescribed legislative requirements.

PASA Chair, Kim Gubler, added: “Initial master trust transitions were wholesale master trust to master trust where continuity option one had been triggered.

“Transition activity is now more complex, with individual employers moving between master trusts and more single employer schemes moving to a master trust.

“The guidance includes model migration project plans and is designed to support trustees, employers and administrators in completing an accurate and timely project.”



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