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We want to help master trusts deliver real value for pension savers

Wednesday 10 July 2024

Nausicaa Delfas, Chief Executive of The Pensions Regulator gave a keynote speech at the Master Trust Conference entitled: We want to help master trusts deliver real value for pension savers.

Good morning.

I’m delighted to be here in front of so many of our regulated community. Over the last year, I have met many of you and heard your views on how we can make pensions work for everyone.

What has been clear is that we are in a moment of great change.

Politically – a new government brings a new outlook.

Economically – a broad consensus has emerged on the need to drive growth.

And in pensions a radical evolution is taking place, shifting the make-up of the market towards fewer, larger schemes.

Since 2012, thanks to automatic enrolment, just over 11 million people have been newly enrolled into a workplace pension.

Many are saving for retirement for the first time and nearly every one of those newly enrolled savers are within a master trust.

In fact, 95% of active memberships in the defined contribution (DC) trust-based pension saving world are saving into one of the schemes in this room.

This means that many of you are evolving into large-scale, complex, financial institutions. And in less than six years, over three-quarters of trust-based DC members could be in schemes of over £50 billion.

By which point, some of you could not only have a large say in the retirement outcomes of millions of savers. But you could also move markets.

So collectively, what do we have to do now and in the future to make sure that savers get the best possible retirements?

We need a laser-like focus on value.

Whilst it is too early to tell the detail of the new government’s policy agenda for pensions – nor would we wish to speculate – as a regulator we are clear on the steps we need to take to make sure pension savers get the retirement incomes they deserve.

For master trusts, that means three things.

First, a focus on investments.

We won’t be telling you where to invest, but we will be challenging you to make sure you have the skills and experience to consider a range of diverse assets if they have the potential to deliver value for the saver over a long-time horizon.

Not only that, we will want to make sure that your consideration of environmental, social and governance issues is not just tick-box compliance, but the genuine product of strategic decision-making with the long-term interests of savers at its heart.

Second, a focus on data quality and standards.

As an industry, of course we have to get the basics right. Good quality data. Securely held. And transactions taking place on time and how we expect. But there is also a huge opportunity for us in an increasing era of data disclosure, and that is why as you will hear later, we are enhancing our digital, data and technology capability.

To make the most of this opportunity, we will start to encourage you to embrace transparency through open standards, open data and common protocols to exchange data and enable flow.

With this greater openness, schemes will be able to spot gaps in provision and develop new propositions, effectively compete for business, and facilitate customer choice.

We want you as business to thrive because when you do, savers benefit.

And third, a focus on innovative solutions at retirement.

Many of you in this room will be starting to develop and launch new propositions to help savers make the most of their retirement income.

This is no easy task – and we want to work in partnership with you so that we can build consensus on what 'good' looks like for products that support savers into and through retirement.

To make all of this happen you will notice a change in our approach as a regulator.

You will start to see much broader engagement, led by my colleagues in Market Oversight. This will be expert to expert, using data and disclosure as the prompt for a nuanced discussion around what you are trying to deliver for your savers.

We will be trying to understand the risks and opportunities as you see them and seek to deeply understand your market propositions.

But this won’t be a one-way interaction and we will use our understanding of the market at large to show you the bigger picture.

We won’t just be asking you to send documentation. We will be meeting you regularly, face to face, to work in partnership so that savers get the best possible outcome from your services.

You will see more of us – but I hope you will also see the clear benefit of the interaction.

I hope today is a signal of our new approach and I look forward to working with all of you to make sure all savers get value for money from their pension.

Thank you.

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