Master trust pensions have become a cornerstone of workplace pension schemes, particularly in the UK’s post-auto-enrolment landscape. This guide provides an overview of their structure, benefits, governance, regulatory framework, and considerations for employers and employees.

A master trust pension is a workplace pension scheme that operates under a single trust umbrella and serves multiple, often unrelated, employers. It is governed by a trustee board and managed by a professional pension provider.
Master trusts are designed to simplify pension provision for employers, especially those without the resources or expertise to run their own occupational pension schemes.

Allows multiple employers to participate in a single scheme.
Contributions from all participating employers and their employees are pooled together for investment purposes.
Employers retain flexibility to define contribution levels and other parameters within the scheme’s rules.
2. Centralised Governance
Governed by a board of independent trustees who act in the best interests of members.
Trustees oversee investment strategies, scheme administration, and compliance with regulations.
3. Defined Contribution (DC) Focus
Most master trusts are defined contribution schemes, where retirement benefits depend on contributions made and investment performance.
Some master trusts may also support defined benefit (DB) arrangements, though these are less common.
4. Professional Administration
Day-to-day operations, including member communication, contributions management, and investment selection, are managed by professional administrators.
5. Portability
Members can often remain within the same master trust even if they change employers, reducing the need for pension transfers.

Simplifies compliance with auto-enrolment obligations.
Reduces the administrative burden compared to setting up and managing a standalone scheme.

2. Cost-Effectiveness

Shared costs among multiple employers lower administrative and investment management expenses.
Economies of scale allow providers to offer competitive fees.

3. Regulatory Support

Providers manage compliance with regulatory requirements, reducing the risk of employer errors.

4. Attract and Retain Talent

Offering a high-quality pension scheme enhances an employer’s benefits package, making it more appealing to employees.
5. High-Quality Governance
Independent trustees ensure that member interests are prioritised, reducing risks of mismanagement.
Governance Structure
Trustees are legally obligated to act in members’ best interests.
Governance responsibilities include monitoring investment performance, ensuring administrative efficiency, and managing conflicts of interest.

Master trusts must be authorised by TPR, which sets high standards for:
- Financial sustainability
- Fit-and-proper trustees and providers
- Robust systems and processes
- Member-focused policies, including default investment strategies.

Authorised master trusts must submit regular reports to TPR, demonstrating continued compliance with standards.
Trustees are required to produce an annual statement of governance, detailing how the scheme operates in members’ interests.

Evaluate providers based on governance standards, fee structures, investment options, and service quality.
Review independent ratings and assessments of master trusts.

2. Costs and Contributions

Determine employer contribution levels and ensure compliance with minimum auto-enrolment requirements.
Assess additional costs, such as employer-specific advisory fees, if applicable.

3. Employee Communication

Ensure employees are informed about the scheme’s benefits, investment options, and how to access their pension information.

4. Ongoing Engagement

Regularly review the scheme’s performance and member satisfaction, with the option to switch providers if necessary.