Master trusts: prepare for future scale requirements now - TPR
Ref: PN26-05
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TPR sets out principles for how trustees can assess their scheme’s growth potential and prepare for proposed new scale requirements under the Pension Schemes Bill.
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TPR aims to support a smooth transition to scale and to reduce uncertainty as master trusts plan for future requirements.
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Employers and advisers considering pension switches are encouraged to take an evidence‑based, saver‑focused approach during the transition.
The Pensions Regulator (TPR) has published a statement today to help trustees of defined contribution (DC) master trusts prepare for the proposed new scale requirements in the Pension Schemes Bill.
Building on the Department for Work and Pensions’ (DWP) Policy Principles Paper, TPR’s statement encourages trustees to:
- evaluate their potential to grow to scale
- develop evidence-based projections
- review their operational readiness for the challenges and opportunities ahead
The statement provides new analysis showing that there is significant momentum and growth potential in the master trust sector as a whole. That is why the regulator urges caution to any advisers and employers second guessing which master trusts not yet at scale will be unable to meet scale within the timescales.
TPR says that employers and advisers should approach selecting a pension scheme in this period of transition focused squarely on saver outcomes. TPR’s statement aims to support a smooth transition to scale. It is intended to reduce uncertainty, and to help trustees, employers and advisers understand the types of analysis and preparation that will be relevant once the requirements come into effect.
Richard Knox, Executive Director, Strategy, Policy and Analysis, said: “We want master trusts to consider their potential to grow, understand the evidence that may be needed in future, and assess their operational readiness for the changes proposed in the Bill.
“By preparing early, trustees can make informed decisions that support long‑term value for their savers. Employers and advisers also have a vital role to play, and we encourage them to take a proportionate, balanced approach that focuses on what delivers the best outcomes for members.”
Helping schemes to scale
The Pension Schemes Bill will introduce a requirement for DC master trusts to hold a minimum amount of assets under management (at least £25bn from 2030) in a main scale default arrangement (MSDA), alongside a transition pathway for schemes that need longer to reach scale.
In anticipation of these changes, TPR encourages trustees to begin considering:
- How their scheme might grow over time, including analysis of organic and potential inorganic growth.
- What evidence might underpin future growth projections, including demographic factors, contribution flows and investment assumptions.
- Whether their governance, systems and processes are positioned to support future scale requirements.
- How their investment capability and governance align with wider reforms in the Bill.
- What these changes could mean for current and future members, including value for money and long‑term outcomes.
Employers and employee benefit consultants also play a key role in shaping market outcomes. TPR encourages them to take a balanced, evidence‑based approach when selecting or reviewing a master trust, considering:
- compliance with auto enrolment obligations
- value for money, including investment performance and service quality
- governance and operational resilience
- preparedness for the proposed scale requirements
- quality of administration and transition processes
Notes to editors
- Read DWP’s Policy Principles Paper, published today.
- Read our statement that complements DWP’s Policy Principles Paper.
- The Pensions Regulator is the regulator of work-based pension schemes in the UK. Its mission is to protect savers’ money, help to enhance the pensions system, and support innovation in the interests of savers. Our statutory objectives are to:
- protect members’ benefits
- reduce the risk of calls on the Pension Protection Fund
- promote, and improve understanding of, the good administration of work-based pension schemes
- maximise employer compliance with automatic enrolment duties
- minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only)
Press contacts
- Out of hours
- This is for journalists only with a media enquiry. The below number will divert to our on call media officer.
- pressoffice@tpr.gov.uk
- 01273 648496
