Different types of workplace schemes have different regulatory requirements. Some are FCA regulated and some are regulated by the Pensions Regulator. This does not mean that one type is good and one type is bad. And neither does it mean that big is beautiful and small is not. There are some very slick operations out there.
“It is worth noting that all workplace schemes, including master trusts, are highly regulated and come with price controls and built-in, independent governance structures. In fact, NEST, the workplace scheme set up by government, is a master trust. This should be of some comfort to employers and savers using master trusts for auto-enrolment purposes.
“The point is that when it comes to workplace schemes there is no one-size fits all solution. Employers need to think about what sort of scheme (and associated services) might work best for them and their workforce. This means considering such things as member charges, administration, investment, communications, asset security and governance.
“Over the course of this year we will see each workplace scheme prepare a report on the extent to which it provides “value for money”. These reports will help to improve standards in workplace schemes generally – and help employers decide what sort of scheme is right for them.
“There is also a master trust assurance framework that provides an independent review against an industry-wide benchmark of quality. A number of master trusts (large and small) are currently going through the assurance framework – and will join the early starters who have already gone through this, still relatively new, process.”
“As part of this, master trusts need to demonstrate that they have a plan in place if, for whatever reason, the scheme needs to be wound up. This will help to address one of the main criticisms of the master trust model.”
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