The UK pensions industry must work together to build trust between members, trustees and employers in relation to master trusts, according to a panel of providers and trustees.
One way providers and The Pensions Regulator (TPR) are hoping improve this trust is the new master trust authorisation regime, in which master trusts go through an authorisation process to allow members to make a more informed decision and provide transparency to the market.
Speaking at the Pensions and Lifetime Association's annual conference, Now Pensions director of policy, Adrian Boulding commented: “We knew authorisation was going to be tough, but we didn't know how tough it was going to be. Every month we discover the amount we have still got to do is bigger than it was at start of the previous month, because we've got another bit of TPR guidance to work through.
“But it is all good stuff. When we have done it, we will be in a better shape than when we started at the beginning of the process and we will have very publicly demonstrated to the TPR that we are in a much better shape. I think that will carry through to confidence in the market and amongst our savers.”
However, some people believe that there is more to be done than just authorisation to win members' trust, as BESTrustees trustee executive Rachel Brougham explained: “I think there's more to be done on member confidence. It [authorisation] will be helpful, but many members do not know what scheme they are in and why it matters that we have authorisation.
“There's a lot we can do as trustees and providers to improve engagement and communication but the industry as a whole needs to work together to re-engender some trust from members and I think that is still a challenge that won't just be solved by authorisation.”
Another key debate was on how much power TPR should have in governing single employer and master trusts. The panel seemed to agree that TPR's involvement in the governance of trusts is vital to their success.
Smart Pension head of policy, Darren Philp said: “This is a market where people aren't making decisions, they're being defaulted into pensions, they're being defaulted into a default fund, so effective policing of that governance is absolutely crucial.”
Brougham added: “I'm hoping, certainly in the early days, that there is a kind of pro-active engagement between regulator and master trust, because we are all learning this new regime together.”
Furthermore, a poll taken during the seminar found that most attendees would support TPR's involvement in single employer trusts in some vicinity.
Around 30 per cent believed that TPR's powers in the master trust space should be extended to the single employer scheme space, while 43 per cent thought it should only be in relation to trusteeship and scheme governance and only 28 per cent voted that TPR should not have any power in single employer schemes.