Transferring to a master trust: considerations for smaller defined contribution schemes

Guidance for trustees of smaller defined contribution (DC) schemes (including DC sections of hybrid schemes) on the considerations and preparation required to assess whether to transfer to a master trust.

Published: 31 March 2026

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Overview

With new legislative requirements expected over the next few years and a rapidly changing DC market, the decision to transfer to a master trust is becoming increasingly relevant to many more schemes.

We have produced this guidance to support trustees of smaller DC schemes considering whether to transfer members to a master trust (instead of other options). It outlines the preparation required to assess whether it's in their members' best interests to transfer to a master trust.

You should read it alongside our guidance on winding up or transferring a defined contribution scheme. This provides information and guidance on making the decision to transfer the scheme and further detail on completing the transfer and wind up process.

There is no official definition of ‘smaller DC schemes’, but for the purposes of this guidance we define smaller DC schemes as those with fewer than 5000 members. DC schemes with 5000 or more members may also find this guidance useful.

Who this guidance is for

This guidance has been created for trustees, but employers may wish to refer to this guidance when having discussions with trustees about transferring members and when considering how best to discharge their automatic enrolment (AE) duties in the interests of their workers.

It’s not our role to advise you on the decision of whether to transfer your scheme to a master trust or other types of schemes (for example, an individual contract-based pension scheme), nor are we endorsing any specific master trust. There may be other options to consider, and you should decide what’s in the best interests of your members. It is also important that you check the scheme governing documentation which sets out who has the power to transfer the scheme.

Case studies

Throughout this guidance we've included case studies that provide real-life examples of smaller schemes successfully transferring to master trusts. These have been produced in collaboration with several master trusts describing how they've assisted smaller schemes to overcome common barriers to transferring members.

Background

The DC pensions landscape is evolving towards fewer and larger schemes. One of the main reasons for this is more schemes are transferring their members to master trusts. But for trustees of smaller schemes who have assessed and decided that transferring out is in the members’ best interests, making the decision to transfer to a master trust can be challenging. There are a range of reasons why this may be the case, such as:

• knowing where to start with considering a transfer, how to select a master trust, when advisers should be consulted during the process and the availability of appropriate advisers
• uncertainty over whether member benefits can be matched or improved with a transfer, particularly regarding any guarantees or guaranteed minimum pension (GMP) underpins
• the costs involved in making a transfer (for example, adviser costs) and whether the scheme and / or employer can cover the cost
• whether scheme data is transfer-ready and how to improve scheme data quality where required

Why this is the time to consider whether to transfer to a master trust

Despite the challenges detailed above, it is timely for trustees of smaller DC schemes to consider what is in their members’ best interests in light of changes in the pensions landscape:

• The master trust market is evolving: there are more solutions available that can help smaller schemes overcome the barriers to transferring – and these will most likely continue to develop.
• Regulatory expectations are increasing: we would like to see higher standards of trusteeship and trustees are likely to need to demonstrate that their scheme is delivering value for money.

Finding a master trust that accepts transfers from smaller schemes

Our conversations with master trusts have given us an insight into which master trusts will accept transfers of members from smaller schemes. See Master trusts accepting smaller schemes for more detail.

Deciding to transfer to a master trust: factors you should consider

Deciding to move your members to another scheme is a significant decision, and it warrants careful consideration of your duties towards your members. Trustees of smaller schemes often feel a sense of personal responsibility towards their members, but securing the best outcomes for them may ultimately require making the decision to relinquish that responsibility by winding up and transferring the scheme.

When making this decision, you will need to consider a variety of factors, including:

• changes to the regulatory landscape
• costs
• regulatory priorities for trusteeship
• the needs and priorities of your members

The changes to the regulatory landscape: does your scheme offer value for its members?

The regulatory landscape for DC schemes is evolving and with that, additional responsibilities and associated costs are expected to follow. We understand that this is a concern for trustees of all schemes, but it may be particularly felt by trustees of smaller schemes.

You should consider if your scheme offers value and will continue to do so in the future. If you know that your members may get better outcomes in another scheme, such as a master trust, you should consider transferring your members.

The consideration of value will become increasingly significant for schemes when the Pension Schemes Bill 2025 comes into force. New requirements relating to guided retirement and small pots are also expected to come into force after the Pension Schemes Bill 2025 receives Parliamentary approval.

This will possibly add an additional layer of complexity to existing trustee obligations, as well as potentially higher administrative costs. For example, if you are a trustee of a scheme which falls into the scope of pensions dashboards legislation, you should already be focusing on ensuring that the quality of your data is of a sufficiently good standard, and that you have regard to the staged timetable setting out your scheme’s ‘connect by’ date in the Department for Work and Pensions’ (DWP) guidance. All schemes in scope must be connected to pensions dashboards by 31 October 2026.

Costs

Costs will be a significant factor in your decision on whether to transfer to a master trust. Even if you think that your costs are lower than other schemes or competitively priced, you will need to consider future costs of the scheme and who will bear the burden of these future costs. In considering the best interests of members, you will need to weigh up the costs of continuing to run your scheme with the costs of transferring to another scheme and also consider any potential changes in member borne costs.

Costs should not be considered in isolation. Consideration should be given as to what members are receiving for the costs charged and how that meets their needs. For example, how has the scheme performed? Are there any services offered that would be valued by your members?

Cost considerations for continuing to run your scheme

• Ongoing, and possibly increasing, costs of running your scheme, including the costs payable by the employer or sponsoring employer.
• Pensions dashboards costs, including initial and ongoing costs.
• Pension Schemes Bill 2025 potential costs, including those associated with scheme administration and investment strategy, may increase because of the expected additional regulatory requirements.

We suggest you undertake due diligence into the cost and resource implications of these expected legislative changes for your scheme as soon as the Pension Schemes Bill becomes law.

Cost considerations for transferring your scheme to another scheme

• Transition costs (ie the one-off cost of disinvesting members from their current investment allocation and moving them to another investment strategy) and whether they will be borne by members or whether they can be subsidised by the receiving scheme.
• The difference in member charges – such as the charges deducted directly from the member’s pension pot – between your scheme and the scheme the members may be transferring to.
• Possible adviser costs and who will be responsible for these costs.
• Winding up costs and who will be responsible for these costs.

It may be useful to speak to a master trust or adviser about this to understand these costs and how master trusts may be able to assist.

Case study: Taking on a smaller scheme that had been turned down by other providers

A master trust was able to take on a smaller scheme, which had been refused terms by other providers because of its size and other issues. The master trust was able to offer competitive member pricing and waive set up costs for the employer. The newly transferred members benefitted from reduced charges in the master trust as a direct result of the transfer.

Case study: Providing support with costs and managing ‘with-profits’ funds

A master trust was able to assist with the transfer of three separate but related smaller schemes into its master trust, despite initial concerns from the employer about costs, and a large proportion of the members with assets in ‘with-profits’ funds.

The employer faced significant legal and transaction costs as part of the project to transfer the three schemes to the master trust. The master trust was able to assist with these costs by providing a competitive Annual Management Charge (AMC) for the members and meeting the employer’s additional project costs. The master trust was also able to accept a large proportion of the members with assets in ‘with-profits’ funds. The benefits of this move for members included transferring from a legacy scheme into a well-governed and modern master trust.

If you are concerned or unsure about the costs of transferring to a master trust, you may wish to seek advice from an Employee Benefits Consultant (EBC). Advisers, such as EBCs, may be able to work with schemes to identify cost-saving measures and support them in sticking to an agreed budget. We have engaged with the market and EBCs have indicated to us that they are likely to be available for discussions with trustees of smaller schemes about transferring to a master trust.

Regulatory priorities for trusteeship

We have set out our regulatory priorities for trusteeship as we want to ensure that all schemes:

• are well run and well governed
• have high standards of administration and good data quality
• are operationally resilient – including against cyber risks

With the growing risk of cyber incidents and the focus on the requirement for correct data (particularly given the introduction of pensions dashboards), trustees will need to ensure that they are not only meeting the needs of members today, but that they consider any potential factors which may impact the scheme in the future.

You should consider whether you as a trustee and the trustee board as a whole can meet these regulatory priorities for the benefits of your members. If you foresee difficulties with this, then you may need to consider if your members would benefit from being in a scheme which can satisfy these regulatory priorities. See our guidance on administration for more detail.

Case study: Completing a transfer despite issues with data quality

A smaller scheme with lower data quality was able to transfer to a master trust with extra support to improve data quality to required standards.

The master trust:

• agreed to accept an initially lower quality of data
• mapped extra data steps into the onboarding process
• provided address searching for up to one year for members that were hard to locate

Data standards were brought up the required level in six months. 

The needs and priorities of your members

You need to consider and understand the requirements and priorities of your members and ensure that your scheme is delivering on them. Are you providing a default fund which meets their needs? Are you supporting your members throughout their pension journey? You should think about whether transferring members to another scheme, such as a master trust, would provide improved member outcomes.

What a master trust could offer your members

Master trusts are authorised and supervised by the Pensions Regulator. For a master trust to be authorised, we must be satisfied that it continues to meet the authorisation criteria including the fitness and propriety of its trustees and others involved in running the master trust, systems and processes standards (including governance) and financial sustainability. A transfer of members from a smaller scheme to a master trust offers a degree of comfort for trustees of smaller schemes that their members will be moved to a scheme which must meet certain standards and is supervised by us to monitor that it continues to do so.

The following is a list of benefits master trusts may be able to provide to members who have transferred from a smaller scheme:

1. Master trusts are often sufficiently large to be able to access a broader set of investment opportunities across a range of asset classes, which may improve the investment strategies they can offer to their members. They have governance structures that can allow for ongoing innovation and adaptation of investment strategies as market conditions change. As such, they may have more opportunity to provide sustainable long-term growth leading to potentially higher returns and larger members’ pots.
2. Moving members and their benefits to a master trust means you can expect the new scheme will be compliant with upcoming Pension Schemes Bill obligations. For example, most master trusts already offer post-retirement solutions and are actively working to develop these in line with the principles of guided retirement.
3. Most master trusts are delivering innovative solutions to communication and encouraging member engagement with, for example, apps, to ensure members are supported in their pensions journey.
4. Several master trusts are also developing innovative solutions to transferring members over with guarantees or additional benefits, such as ‘with profits’, and some have solutions to utilise defined benefit (DB) surplus for DC contributions. It is probable that, where trustees are unsure if they have additional benefits or guarantees relating to DB, master trusts would be able to discuss this with smaller schemes.

Case study: Support provided by a master trust during the transfer process

A smaller scheme sought to move to a master trust to provide an improved member experience, access the full range of retirement outcomes and reduce the employer cost burden by winding up. The selected master trust was able to provide:

• plans to support member and asset transition
• investment design
• online and offline member support
• an initial and ongoing communications plan

Approaching and selecting a master trust

You should identify a suitable pool of master trusts for your members based on a range of factors relevant to them. Our list of master trusts open to enquiries from smaller schemes is a good starting point .Consider looking at the master trusts’ websites or speaking directly to them to understand their potential offerings for members.

We have provided a list of questions you may want to ask as part of your due diligence of master trusts below, but you are also likely to have questions specific to your members and scheme.

Remember that a master trust will want to know about your scheme and members, so ensure that you are prepared to answer those questions. One master trust has told us that the questions they would ask smaller schemes include details of ongoing contributions, details of the membership (salaries and dates of birth) and asset holdings for the active and deferred members.

• What is the onboarding process like? How long will it take?
• Can you explain your default investment strategy and the means by which you access the underlying investments (for example, third-party funds, or in-house direct investments)?
• Can you explain any alternatives to the default investment strategy, including the range of self-select funds?
• To what extent does your default strategy align with the current default strategy of the scheme, including asset allocation and environmental, social and governance (ESG) credentials?
• How does the range of self-select funds offered by the master trust compare with the scheme’s current provision?
• Are you able to assist with member communications during the transfer?
• What do I need to do to prepare my data for a transfer to your master trust? How is that data transferred to your master trust?
• If transferring members who are currently employed by one of the sponsors, how do you manage AE?
• Are you able to project manage the transfer?
• Can you explain your pricing for members, for example what are the ongoing annual charges, one-off charges, exit charges and investment costs for different funds? Who pays these costs?
• How do you engage members, for example, do you have an app?
• What options do you currently provide to members at and after retirement?
• What are your plans for complying with upcoming guided retirement requirements?
• If relevant, how do you deal with member benefits, such as guarantees and with-profits? Note: having such benefits or guarantees does not automatically mean that you cannot transfer into a master trust and you will need to discuss this matter with your preferred master trusts.
• If relevant, how do you deal with hybrid schemes and DB surplus solutions?

The responses you receive to this list of questions will help you decide which master trust is the most suitable for your members, should you have a selection to choose from. Consider your members’ needs, for example:

• Are they deferred members or are there a number of active members (for example, AE obligations may differ depending on whether a member is deferred or active)?
• Do they regularly engage with the scheme?
• Are they interested in their investments, or do they take a more passive approach to their pot?

You will also need to consider any other factors which are specifically relevant to your scheme. One master trust has suggested that these may include overseas members, payroll complexities and multiple scheme consolidation.

Case study: Completing a successful transfer despite members having overseas addresses

A master trust was able to take on a DC scheme which had members with overseas addresses when other providers were unable to do so. The master trust permitted members with an overseas address to join in line with the master trust rules, while supporting the bulk transfer of existing member assets from the scheme to the master trust. It also used multiple ways of communicating with members to keep them fully informed.

Master trusts accepting smaller schemes

If you are a trustee of a smaller scheme who would like to approach a master trust about the possibility of transferring members but are unsure which master trust to approach, we may be able to assist.

See our list of master trusts open to enquiries from smaller schemes

The list of master trusts open to receiving enquiries from smaller DC schemes considering a transfer into a master trust (‘the list’) is a voluntary initiative hosted by TPR. It has been created to assist trustees of smaller DC schemes in their search for master trusts to approach regarding the possibility of transferring their members.

The list is included as part of this guidance and should be read in conjunction with it.

Neither the list nor this guidance indicate that transferring into a master trust is the most suitable or only option open to trustees when considering the best interests of members. Trustees should consider all options and seek independent advice where necessary.

A master trust being included on the list does not guarantee that a transfer will happen, nor that a transfer is appropriate. Trustees must still undertake their own full and comprehensive due diligence, as all trustee duties and responsibilities will still apply.

• Aegon Master Trust
• Aviva Master Trust
• Cushon Master Trust
• Legal & General WorkSave Mastertrust
• The Lewis Workplace Pension Trust
• NOW: Pensions Trust
• The People’s Pension
• The SEI Master Trust
• Smart Pension Master Trust

The criteria for master trusts wanting to join the list are:

• The master trust must be an authorised master trust.
• The master trust must not be the subject of a live enforcement case with TPR.

If you wish to join the list, please contact: sedc_supervision@tpr.gov.uk

Terms of use of the list:

1. Use of the list is voluntary.
2. Master trusts can remove themselves from the list at any time by giving notice to us in writing to sedc_supervision@tpr.gov.uk
3. We will ask all master trusts on the list to reconfirm criteria for inclusion annually. If a master trust does not reconfirm by the relevant date it will be removed from the list.
4. Where the criteria are no longer met, TPR will remove the master trust from the list. TPR can also remove a master trust from the list at our discretion.
5. In providing the list, we are not implying that we in any way endorse or approve the master trusts listed for the purpose of transfers in.
6. Users of the list do so at their own risk. We will not be liable for any resource, costs, loss, damage or claim arising from, or in connection with the use of the list.

Hybrid schemes: other factors to consider

If you are a trustee of a hybrid scheme considering the DC section, you will also need to consider if any factors associated with the DB section are preventing the DC section from transferring to another scheme. For example:

• Is the employer focused on the DB section?
• Does the DB section take priority or is there a lack of resource for the DC section?
• Is there an endgame strategy for the DB section?

You may need to have further discussions with the employer to ensure that the members of the DC section are not disadvantaged because of this. If you, as a trustee, or the trustee board believe that transferring the DC members to another scheme is in their best interests, then you should communicate this to the employer.

From our observations of the master trust market, we understand master trusts may be able to assist trustees of hybrid schemes that have DB sections with surplus funds to transfer those surplus funds into the DC section. We recommend that trustees who are considering this path review their scheme governing documentation, obtain legal advice and consider the best interests of their members before making any firm decisions.

Preparing to transfer your members to a master trust

If, having read this guidance, considered all the relevant factors and carefully discussed this as a trustee board, you decide that transferring your members to a master trust is in the best interests of your members, see our detailed guidance on winding up or transferring a DC scheme. This contains information on all the steps you must follow. Although you may want to appoint an adviser when working through this process, you may well be able to undertake initial work on all the steps without using a third-party adviser.

Further resources

• Master trust guidance (opens in new tab) from The Pensions Administration Standards Association (PASA)

Feedback

We plan to update this guidance if and when appropriate.

We welcome feedback on this guidance or any matters relating to it, including:

• any potential barriers that may be preventing you from transferring into a master trust
• the list of master trusts open to receiving enquiries from smaller schemes

Please contact us at sedc_supervision@tpr.gov.uk.

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