Following the implementation of the Institutions for Occupational Retirement Provision (IORP II) Directive, the master trust market in Ireland has grown to €22bn in 2023, according to a survey by LCP.

IORP II was passed into law on 21 April 2021 in Ireland, setting common standards in order, ensuring the soundness of occupational pensions and how to better protect scheme members and their pensions assets. The legislation was designed to improve the management of pension schemes by implementing stricter rules around governance and communication, leading to better outcomes for members.

Since then, LCP said master trusts have become a go-to product for employers providing pensions.

LCP surveyed master trusts servicing the corporate pension market, with six out of nine providers participating in the survey, covering eight trusts which in total held €16bn in assets at the end of 2023, approximately 70% of €22bn quoted for the whole market.

The six providers look after 316,000 members, both active and deferred, with 3,300 participating employers, meaning that master trusts saw more than 2,000 employers join with more than 155,000 members.

With the automatic enroment on the horizon, LCP expects that by the end of the 2024, master trust assets will increase to €20.9bn, with 378,800 members and 4,234 participating employers.

The size of participating employers varies, according to the report, with the largest employers bringing in €620m in assets. The average size of employers in the trust is €4.7m.

The report also showed that master trusts in Ireland come in “all shapes and sizes” with the smallest master trusts holding €5m in assets, while the largest holds €6.4bn.

However, despite the growing demand for master trusts in Ireland, 33% of the surveyed operators believe there is too many master trusts in the market, with a majority (67%) saying they expect consolidation of the existing market in the future.

Martin Haugh, partner at LCP, said: “Over the last few years LCP have been helping employers review, choose or change master trust provider.

“In the course of this we have seen the market evolve (for the better!). While some of this change has been regulator-led, the majority has been driven by greater competition between providers who have pushed each other to develop, innovate and drive down costs.”

Some of the changes he highlighted also included transparency and robustness of governance structures; quality and delivery of member communications; and design and cost of investment solutions.

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