The Pensions Administration Standards Association (Pasa) has published guidance on transitioning members to and from defined contribution master trusts.

Pasa issued the guidance through its Master Trust Transition Working Group (MTTWG) as it expects consolidation demand to increase.

It focuses on the two “most common” scenarios, in which members are transitioning from one master trust to another through ‘continuity option one’ or from single employer DC schemes to master trusts.

‘Continuity option one’ refers to when trustees of a master trust must transfer out all their members and wind up.

The Pensions Regulator (TPR) said that it “welcomed” the guidance. It said: “Authorisation is putting safeguards around master trusts, giving reassurance to trustees of both exiting master trusts and consolidating single-employer DC schemes transferring their members into these schemes.

“Prioritising data as well as putting savers and employers at the heart, including keeping them informed, is key to a successful transfer and continuing confidence in pensions.”

The MTTWG publication issues guidance to trustee on the legal considerations, planning the transition, communicating with members, the data transition and the asset transition.

MTTWG chair, David Porter, stated: “Auto-enrolment led to a surge in new DC master trusts. Concerns about how they would all provide good outcomes for members led to a raft of new of regulation such as TPR’s authorisation regime and ongoing supervision being put in place to safeguard member savings.

“As a result, these DC master trusts have a high standard to meet, and rightly so. They must ensure high governance benchmarks and new financial reserving requirements.

“Beyond financial and operational aspects there are also requirements around how one DC master trust transitions to another. This is central to our guidance.”

MTTWG board sponsor, Tracy Weller, added: “The pace of consolidation continues to build, even more so now with a positive nudge from the TPR for market consolidation and for underperforming DC schemes to consider moving to DC master trusts.

“Once we’re in a post authorisation environment, market dynamics will also come into play. More individual employers are likely to move between these DC master trusts, and more single employer DC schemes will transition to one of the authorised master trusts.

“Our guidance will support trustees and the wider industry as the market continues to change, evolve and consolidate.”

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