The U.K. Department for Work and Pensions is seeking input from employers and plan participants on master trust regulation.
Under planned regulatory changes, the U.K. government will expect multiemployer defined contribution plans, known as master trusts, to gain new authorization to continue to operate in the defined contribution market.
The new master trust regime will be administered by The Pensions Regulator, which will support plans through operational guidance and a code of practice.
The aim of an authorization and supervision regime is that participants of master trusts have equivalent protections to participants in other types of retirement plans. The regulation will cover risks such as lack of employer engagement, diverse business models, and other factors that influence their financial resilience and viability, DWP said.
Tim Gosling, policy lead for defined contribution at the Pensions and Lifetime Savings Association, said in an emailed comment, "DWP has built on the Pension Schemes Act 2017 with a regulatory package that will protect consumers while taking account of the diversity of the market. We and our master trust members have been working closely with DWP over the last year on the development of the regulations. Over the coming weeks we will work further with the department to help ensure that the final rules are workable and proportionate."
John Wilson, head of technical at JLT Employee Benefits, added in a separate emailed comment: "Given the increasing popularity of master trusts, draft regulations are important to ensure that a proper authorization and supervision regime is put in place. Master trusts are not necessarily superior in all circumstances and the key to making the right choice for a particular organization is to start by defining what is important for both employees and employer, and prioritize needs accordingly."
Employers and plan participants have until Jan 12. to contribute views.
