UK regulator to evolve supervision of master trusts

The Pensions Regulator (TPR) said it is evolving its supervision of master trusts to focus on investments, data quality and standards, and innovation at retirement.

Neil Bull, TPR’s executive director of market oversight, told an audience of master trust chairs of trustees, trustees, scheme strategists and scheme funders at a regulator’s event that the move would see master trusts become the “gold standard for pension provision”.

Bull added that value has to be the “guiding light” for all that the regulator does. He said: “For our engagement with master trusts that means a focus on investments, a focus on data quality and standards. And a focus on innovation at retirement.”

He explained that the shift follows the success of the master trust authorisation and supervisory regime, which resulted in high levels of governance and administration for master trusts.

Bull added that he wanted master trusts to see their relationship with the regulator as a partnership, which “mitigates harms, identifies opportunities for savers and delivers value”.

He also called on master trusts to candidly share their thoughts so TPR can explore their concerns and build sophisticated evidence bases to “understand the bigger picture”.

Bull added that many master trusts will have already seen a difference in how TPR engages with them on investments. This includes expert-to-expert conversations where a multi-disciplinary team from TPR engages with a master trust’s investment and strategic experts as well as its trustees.

As part of the new supervisory approach to master trusts, Bull said the regulator will probe and challenge more on how a master trust’s approach to investments delivers for savers as well as investigate how a master trust is seeking the best possible long-term risk-adjusted returns.

TPR will also look more broadly at master trust investment governance practice and investment decision-making and request deep dives into the systems and processes of master trusts.

Bull said: “Our visits need not be cause for concern but seen instead as a learning opportunity for us both. This will mirror the activity we see in the private sector when master trusts showcase their offer to employers explaining their operations.”

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