Home Knowledge Mapping a Move to Master Trusts: Pensions Authority’s new Master Trust Guidance

Mapping a Move to Master Trusts: Pensions Authority's new Master Trust Guidance


Master trusts are a form of multi-employer pension scheme for unconnected employers. They are expected to become an increasingly popular alternative to standalone defined contribution (DC) schemes, given the increased regulatory burden and related costs for employers operating such schemes. The Pensions Authority (Authority) recently published its Code of Practice (Code) for pension trustees compliance with IORP II requirements, which we commented on here. The Code included a new chapter on specific governance requirements for master trusts (Master Code). This has now been supplemented by the Authority’s guide for employers on master trusts (Guidance). Employers now have a toolkit for evaluating provider offerings if contemplating a move to a master trust in 2022. 

A. New Standards for Master Trusts 

The Master Code introduces the minimum standards that the Authority expects from DC master trusts. We outline some of the key requirements below.

1. Capitalisation.

Master trusts are expected to have sufficient capital to cover running costs and the costs of winding up the scheme without affecting member funds. This includes a requirement to have a cash reserve held on deposit unless the Authority approves an alternative arrangement. The reserve for wind-up costs must be €70 per member, with an overall minimum reserve requirement of €100,000 regardless of member numbers.

2. Conflicts of Interest

The Master Code acknowledges the potential for conflicts arising in a master trust, given that the founder typically provides all the services to the trust. The Authority expects that:

  • trustees should not be inhibited by their relationship with the founder in deciding whether to remove or appoint a particular service provider
  • the rules must not place unacceptable constraints on the trustee’s power to act; and
  • where the trustee has sought and not obtained the founder’s agreement on an issue, they must notify the Authority where they are not satisfied with the outcome.

3. The Master Trust Trustee

The Master Code introduces specific requirements in relation to the trustee of a master trust:

  • the entity must be the trustee of one, and only one, specifically named master trust; and
  • the trustee chairperson must be independent and not associated with the shareholder(s) of the trustee company or the service provider to the scheme.

4. Trustee Role relating to Members

There must be an engagement policy for communication with employers and members. This policy must include a commitment to actively engage with employers and members, and the Master Code suggests an AGM may be one way of doing so.

The Master Code also requires the trustee to have a written policy (policy) specifying how charges for members and employers are transparently disclosed. The policy must provide that charge increases can only be made after giving six months’ notice to members and employers, and that transfers of assets in and out must be without charge.

The Authority is introducing an enhanced regulatory regime for master trusts that will place an increased compliance burden on the trustees and associated service providers.  Given some rules’ stringency and practical effect (e.g., capitalisation requirements), we expect that these requirements may be put on a statutory footing in due course.

B. New Guidance for Employers 

The Guidance acknowledges that IORP II implementation leads many employers to consider the alternative of master trusts for future pension provision. To assist employers in deciding whether such a move is appropriate, the Authority recommends that employers consider the following: 

  • Clarify that the master trust trustees satisfy the required “fit and proper” standard to which trustees are now subject.
  • Understand the charging structure within the master trust and assess whether it is competitive relative to other providers.
  • Review the investment and default investment options to ensure they are appropriate and that related member communications are clear.
  • Confirm that the provider meets the capitalisation expectations of the Authority.
  • Ensure that the required conflicts of interest policies are in place.


Employers considering the move to a master trust should take their time and carefully assess the pros and cons of doing so. Master trusts will address some of the costs associated with IORP II compliance,  but there are downsides that need to be factored into the decision-making process. The Authority’s Guidance will assist employers when it comes to assessing providers. However, employers should also seek advice on whether the move to a master trust is the right one for their business in the first place.

Contact Us

For more information, please contact Ian Devlin, Ciara Mc Loughlin or your usual William Fry contact.


Contributed by Jane Barrett