Some 87% of master trusts support future collaborative efforts to overcome barriers to good service delivery, the Pensions Management Institute (PMI) says.
Its survey of 15 master trusts found all participants believed authorisation is a good thing – with 93% strongly agreeing with the regime, and 7% agreeing. Some 60% of the institutions surveyed believed there will be no more than 20 master trusts in five years.
The authorisation regime came into force on 1 October. Under the regime, master trusts will need to apply for authorisation by the end of March next year, costing them up to £41,000, or wind up and transfer members to an authorised scheme.
The PMI’s survey was conducted in conjunction with its Master Trust Working Party, which was set up in March, as part of a wider report. It assessed the master trusts’ thinking on regulation, costs, system limitations and skills in the market.
Nearly three quarters (73%) of respondents believed there was a defined contribution (DC) skill shortage at The Pensions Regulator, while 27% thought there were DC skill shortages in almost all areas (professional independent trustees, communicators, consultants, system providers and administrators).
In the governance section, 40% said the master trust funder should appoint professional independent trustees, and a third thought the trustee board should appoint them. Over a quarter (27%) of respondents felt there were not enough independent trustees with the “right mix of experience” of commercialism and defined contribution (DC), although 60% said these were “sufficient”.
The majority (87%) of respondents felt major master trusts should focus on member experience and proposition improvements rather than cost reductions.
Some 60% agreed that insufficient system integration and technology is a barrier to good member outcomes, and 80% of master trust providers felt that cost was the main reason for the adoption of technology being slow. Nearly three-quarters (73%) said this was down to “limitations of current systems”.
Some 53% felt a pension dashboard would drive the adoption of technology. The Department for Work and Pensions published the pensions dashboard feasibility study – nine months after it was originally due – earlier this week.
Meanwhile, 47% said master trusts are starting to “move forwards in driving the member experience closer to the customer experience from financial and retail sectors”. Although 13% of respondents felt that master trusts are moving quickly enough, 40% noted that the industry still lags behind other sectors.
Over half (53%) of respondents agreed that rules around guidance and advice impeded current and future delivery of services to members that would provide better outcomes, while 47% felt the same about rules on communications generally.
Commenting on the findings at the launch of the report today (5 December), PMI president Lesley Carline said what came from the report is that “we have known barriers are there but now we can bring people together”.
She added: “What is coming out now is that governance models in master trusts are different from a single trust, and trustees are now operating in more of a commercial environment regardless of if it’s a not-for-profit or commercial master trust.
“They will have to manage a different set of conflicts than before. So this is something our group [working party] can investigate further.
“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.”
She added that a collaborative approach seems to be a “no brainer”.
Among the master trusts assessed by the PMI were Aegon, Aon, Atlas Master Trust, BlueSky Master Trust, Legal & General, Lifesight, Mercer, National Pensions Trust, Now Pensions, Salvus Master Trust, Scottish Widows, Smart Pension and Standard Life.