DC Trust, Master Trust or contract based – which would you choose?

With the ongoing improvements in regulation and increased requirements around running your own trust-based scheme, many employers and Trustees are considering switching, but what is best for your members and the company, and more importantly, how do you decide?

‘Good member outcomes’ need to be the starting point for any employer or Trustee and many Trustees are not professionals. Do they have the experience, expertise or time to appropriately run the existing scheme, let alone make a choice on any new provision?

Then there is Master Trust authorisation, the numbers quoted vary, but we believe there are around 50 Master Trusts in existence presently, and if they want to continue operating, all of these will need to apply for authorisation by the end of March this year. But as of 6 February 2019 the Pension Regulator confirmed only seven had made this application.

Many organisations we have spoken to have openly stated that Master Trust is their preferred route, however, some have said it definitely wasn’t (although in these cases, the company had spoken to providers who don’t have Master Trust in their offering). But there are other options, including maintaining the existing Trust-based scheme.

The problem is how do you know what is best for you, your organisation and your employees / members? Many providers who don’t have a Master Trust tell you that it isn’t the best route, meanwhile advisers that have a Master Trust tell you that it is. Third party administrators who can administer an existing Trust-based scheme tell you that you should maintain that and just deal with the increased costs and regulatory requirements.

At Broadstone we have the ability and experience to provide the necessary unbiased advice and help to guide both employers and Trustees whilst ensuring that members also understand what is happening and why. We don’t have our own Master Trust to promote, we can provide third party administration if required (even if just whilst the existing scheme structure is changed) and we aren’t tied to or funded by any provider.

If you would like to have a no obligation discussion about your options please contact a member of our team.

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