Irish master trusts must avoid UK’s mistakes

The Irish government must set a high enough quality bar for master trusts to avoid issues faced in the UK, according to a pensions expert.

Eversheds Sutherland International head of pensions, Francois Barker, said master trusts can be a force for good in the pensions industry, however, it will face challenges in creating a functioning quality bar to not make the same mistakes as the UK did during its launch.

“The challenge is how you set up a quality bar at a high enough level on the way in to stop scam schemes, or the sub-optional ones, while not deterring good entrance,” Barker said at the Irish Association of Pension Funds' (IAPF) Annual Benefits Conference.

For a single-employer pension scheme, a master trust acts as an oversight, and the Pensions Authority said the area is growing and becoming a new genre of pension scheme for the Irish public.

CEO Brendan Kennedy said, pointing out that the master trust consultation currently held in Ireland closes this week: “This is an area that the pension authority view needs more regulation than it currently has. And against this background we are assessing the responses to the consultation.”

On Monday, the UK’s The Pensions Regulator (TPR) published new policies on master trust supervision and enforcement. From now on TPR will supervise authorised master trusts with a risk-based strategy which could lead to one-to-one supervision and withdrawal from the market.

The policy clarified the regulator’s new supervisory regime, which previously placed more weight on the close supervision of new master trusts, but will now operate a “basic level of supervision for all”.

IAPF CEO Jerry Moriarty said the Irish government should try to avoid ending up in a similar situation. The challenge will be “making sure you’ve got that balance of an appropriate regulation but also making sure that you have actually got master trusts that are able to set up and able to exist.”

State Street Global Advisors (SSGA) Ireland managing director and head Ann Prendergast said that while the appropriate regulations are important, it is not the main area of concern.

“What we should focus on is the outcome for members,” she said.

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