The working party, consisting of eight companies and the PMI, conducted a survey of 15 major institutions, with a Master Trust offering, on their current thinking on regulation, costs, system limitations and skills, in this market.
Authorisation and collaboration
All the respondents overwhelmingly agreed (93% strongly agreed, 7% agreed) that the Master Trust authorisation regime was a ‘good thing’. Respondents questioned the level of the Pensions Regulator’s (TPR) supervision and how prescriptive it may become. 27% of respondents expressed preference for a more principles-based approach, whilst 73% were content with TPR’s detailed approach. When asked about the level of advice and guidance needed, 53% agreed that rules around advice and guidance impede the current and future delivery of services to members. Also, almost half (47%) of respondents claim the regulations impact effective member communications.
87% of participants meanwhile, felt that authorisation would accelerate consolidation and collaboration. This is already being seen, as TPR has announced that 30 providers will not go through the authorisation process. PMI’s research also highlighted that 60% of participants believed that there will be no more than 20 Master Trusts in five years, with 20% feeling the number will be 25-30 and 13% thinking there will be 40 in five years.
Greater technology
The working party also looked at how the introduction of technology could help support the growth of the industry. 53% of providers believed that newer industry-wide collaborative technology such as Pensions Dashboards would help drive the adoption of technology amongst Master Trusts. However, almost three quarters (73%) of Master Trust providers claim that current systems limited their ability to adopt new technology.
DC Skills
The research also identified areas for further improvement, notably skills within DC. Almost one third (27%) of those surveyed think that Trustees do not possess the right balance of commercial and DC experience required at a Master Trust. The problem is thought to be industry-wide as almost three quarters (73%) of respondents believe there is a shortage of DC skills at TPR. However, TPR has taken a proactive stance on this, with Lesley Titcomb commenting earlier this year that they are “recruiting very successfully” in the DC arena.
Lesley Carline, President, Pensions Management Institute, commented: “Our report has shown that the growing Master Trust sector must overcome significant obstacles if it wants to offer good service delivery for members. However, the figures also indicate that much of the industry, including some major players in the Master Trust sector, are largely aligned and eager to work together to help tackle industry issues.
“In fact, 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. We have established the Master Trust Working Party at the PMI in order to do just that – and we look forward to facilitating this process over the coming year.”
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