The master trust market is growing rapidly. Membership has doubled from 7m members at the end of 2016 to nearly 14m at the end of 2018, and invested assets have nearly tripled from £10bn to £30bn over the same period*.
Before authorisation there were over c.90 master trusts in the market. Only 38 applied for authorisation. The authorisation of master trusts challenged the industry and fundamentally re-shaped the market. Members and assets from those master trusts exiting the market will need to be transferred to those remaining, and it is not yet known how many master trusts will be authorised and what this will mean for competition and consumer choice.
Looking ahead, master trust assets are forecast to grow into the hundreds of billions and the market is set to continue to evolve and be challenged. Master trusts will be facing the challenge of continuing to satisfy the Pensions Regulator (TPR) that they meet the authorisation criteria through the supervisory regime, whilst developing and competing through a period of significant growth and consolidation. This will challenge the validity of business plans, the accuracy of forecasts and the adequacy of financial reserves to protect members.
The PwC master trust advisory team brings together specialists to support both scheme funders and trustees to address these challenges and achieve their objectives.
* The Pensions Regulator – DC trust: presentation of scheme return data 2018-2019