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Pension Authority Proposals for Master Trusts


The Pensions Authority (the Authority) recently published its response to the consultation it carried out last year on trustee obligations for DC Master Trusts (MTs).  Arising from that consultation, it has revised some aspects of its proposed standards for MTs.  While the intention is to incorporate these revised proposals into more formal codes of practice at a later date, they strongly signpost the terms of the proposed regulatory regime for MTs in Ireland.

We have set out below a high-level summary of some of the key elements of that proposed regime. 


The Authority has retained its requirement that the trustee entity for a MT must act solely as trustee of one named MT. This will have implications for existing MT providers whose trustee entity also operates as trustee of other pension vehicles. 

The requirement that a majority of the trustee’s directors must be independent has been replaced with a simple requirement that the chair must be independent. Independence here is understood to mean that the chair must not be a beneficiary of the trust and must not be connected or associated with the trustee’s shareholders or the MT’s service providers. 

How this independence requirement will be interpreted in practice remains to be seen but it could potentially exclude a wide category of individuals from acting as chair where they have connections with a MT’s service providers.  

The Authority will require all directors to satisfy the requirements for a qualified trustee or an experienced trustee. 

This goes beyond what the IORP II Directive requires where “collectively” the trustee board must meet fit and proper standards. It is a clear indication that the Authority will expect a higher degree of professionalism from trustees of MTs. 

Detail on what will be regarded as a qualified trustee or an experienced trustee is still awaited.

Continuity Plan

The Authority expects to see a continuity plan for MTs that is “sufficiently detailed and comprehensive so that the Authority can be satisfied as to its reasonableness and robustness”.  It must cover income and expenditure projections over a three-year period or, if greater, the period until the MT is projected to be self-sustaining. 

The Authority is focused on the plan demonstrating the viability of the MT and it will pay particular attention to differences between forecasted projections and actual outcomes. However, what response the Authority will take where it is on notice of any material differences between projections and outcomes is not set out. 


The Authority has now set out detailed information on the capitalisation requirements that will apply to MTs.  

They will have to maintain cash reserves on deposit of €70 per member to cover wind up costs and a minimum capital reserve requirement of €100,000 will apply regardless of membership numbers.  The reserves for ongoing running costs must meet the maximum need projected in the continuity plan.  

These figures will be reviewed regularly to ensure they remain appropriate. 

Trustees will be required to immediately notify the Authority of any breach of these capital requirements and take steps to remedy the situation.

Although the level of capital reserves MTs will be required to hold is less onerous than equivalent UK requirements, it is likely to limit the number of providers who would otherwise enter this market.


The Authority will require MTs’ governing documentation to contain provisions which do not bind the MT to a particular provider or restrict choice of providers. 

This is something that will affect many established MTs as their governing documentation would often make the appointment of administrators, investment managers and other key service providers subject to the founder’s agreement.


On charges, the Authority will need to be satisfied that charges are understandable from a member perspective.  The Authority has proposed that no charges would apply on transfers in or out of a MT.  It has also reduced from 12 months to 6 months the proposed notice period applicable to any increases in charges. Complying with this requirement could prove difficult in practice.

What’s missing?

While there is a lot more detail in these revised proposals there are certain key issues that are left unaddressed.  

The Authority’s proposals are directed at the trustee of the MT rather than the founder/promoter.  This may be explained by the fact that the Authority’s remit under the Pensions Act is to regulate trustees.  However, given that the party designing and establishing the MT will be the founder/promoter, the absence of any requirements directed at such a central stakeholder is surprising.

We have not seen any details on what formal authorisation process new MTs will have to go through once the codes of practice come into force, or what “grandfathering” arrangements will apply to existing MTs.  

The regulatory burden of complying with IORP II, once transposed, is likely to force many existing DC schemes and their sponsors to consider consolidation into a MT.  One of the practical challenges facing any scheme considering a move to a MT is how to seamlessly transition assets out of that scheme into the MT.  At present, any scheme considering this route will have to comply with disclosure and bulk transfer regulations on wind up and transfer into a MT.  This is a cumbersome, time-consuming and costly process and legislative change here to streamline that transition process would be welcome.

Next Steps

Existing MTs will need to review the Authority’s proposals carefully to assess their practical implications.  At a minimum, they will need to review, and in some cases, restructure the corporate entity and board composition of their trustee companies.  The headline issue for most MTs will be the proposed capitalisation requirements and what impact this will have on existing business models. That said, these proposals won’t be adopted into formal codes of practice until IORP II is transposed, and when that is likely to be remains uncertain. 

For further information, please contact any member of the William Fry Pensions Group or your usual William Fry contact.




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