A shortage of UK pension professionals with defined contribution (DC) experience – even within the regulator – is a concern for those running master trusts, according to a new survey.

Industry body the Pensions Management Institute (PMI) questioned executives from 15 DC multi-employer master trusts in the UK, seeking to find their largest concerns.

The survey found some 73% thought The Pensions Regulator (TPR) did not have the necessary DC skills to work with master trusts. The remaining 27% felt there was a shortage across the whole industry of people with good knowledge, experience and understanding to lead these large institutions.

Master trusts have been subject to a TPR-enforced authorisation regime since 1 October. The new rules include key staff and expertise requirements.

TPR was approached for comment by IPE. However, the report said since the survey had been conducted in August 2018, TPR had announced measures to address this concern, with participants now “anecdotally” expressing greater confidence in this area.

Lesley Carline, president of the PMI, said: “Our report has shown that the growing master trust sector must overcome significant obstacles if it wants to offer good service delivery for members.”

The survey found that, while many were happy with the way the sector was developing – and that authorisation by TPR was key to a well-functioning market – there were concerns with regulation.

More than half (53%) agreed that rules around advice and guidance impeded both current and future delivery of services that would provide better outcomes to members, with a further 45% feeling the same about directions on communications generally.

The UK’s evolving master trust model

The PMI said it had received comments that included some “strong feelings” that members were not getting a good service due to regulations put in place to protect them.

Some 73% of providers claimed current systems limited their ability to adopt new technology, while 53% said newer industry-wide collaborative technology such as pensions dashboards would help them access it.

The figures also indicated that much of the industry, including some major players, were largely aligned and eager to work together to help tackle industry issues.

Carline said: “A collaborative approach appears to be a ‘no brainer’, as the majority of the firms we surveyed would support further joint efforts to tackle the barriers to good service delivery and positive member outcomes.”

The PMI has launched a Master Trust Working Party, which will meet over the coming year.

Overall, the survey found the vast majority of providers (87%) felt that authorisation would accelerate consolidation and collaboration, something that is already being seen. TPR has estimated that 30 providers would likely not go through the authorisation process due to problems with complying with the new regime.

The survey showed 60% of participants believed that there would be no more than 20 master trusts in five years’ time.

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