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Framework for effective governance of master trusts published

14 May 2014

The Pensions Regulator has set out a voluntary assurance framework for effective governance of master trusts.

The assurance framework will allow trustees of master trusts to demonstrate to employers that their scheme is being governed to a high standard.

Developed by the ICAEW and the Pensions Regulator in collaboration and consulted on last year, the main aim is to support trustees of master trusts and the practitioners who are engaged to provide independent assurance reports.

It sets out how trustees should report against a series of ‘control objectives’ related to governance and administration, which are aligned with the regulator’s defined contribution (DC) quality features, and which procedures practitioners must undertake. The Pensions Regulator has stated its intention to establish and maintain a publicly available list of master trusts that have obtained independent assurance, to which employers and advisers can refer when selecting a scheme for automatic enrolment.

The framework has been available since 1 May 2014, which will enable master trusts to provide their first report in accordance with this framework for periods ending in the financial year 2014/15.
A master trust is a collection of funds from individual investors that are pooled together in order to obtain wholesale prices and rates unavailable for regular investors.

The ICAEW has also published guidance on applying the framework to occupational DC master trusts.

The Pensions Regulator’s executive director for DC, governance and administration, Andrew Warwick-Thompson, said: ‘It is important that schemes operating in this market place are scalable, durable, well-governed and embrace high standards of practice. Assurance acts as a check against schemes being set up by people who lack the competence or financial resources to take care of people’s pension savings adequately.

‘While voluntary, we expect master trusts to obtain this independent assurance and we strongly support those providers who have already informed us of their intention to adopt this important accreditation.’

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