With a growing market in DC Master Trust employers now have a greater choice in where to invest their employee’s pension contributions. The PMI Master Trust Working Group have published a report on the link between good governance and strong member outcomes for DC Master Trusts (15 October 2020).
There were some great examples of good governance for DC master trusts in this publication:
- Put the right structures and procedures in place to enable effective, timely decisions, to provide clear scheme objectives and to appropriately identify, evaluate, and mitigate risk.
- Have diverse trustee boards and decision makers with the right skills, experience, qualities and capacity to run the pension scheme effectively in line with members’ best interests.
- Process core financial transactions promptly and accurately.
- Ensure systems and processes are robust.
- Be prepared for unforeseen events to enable business continuity.
- Closely assess value for members, manage costs and charges, and disclose these effectively to members.
- Ensure member data is complete and accurate and is stored securely.
- Appropriately communicate with members and employers in the right format, with the right content at the right time and provide information to support members investment choices and retirement decisions.
- Hold service providers to account.
- Continuously monitor and improve the quality and impact of governance.
The PMI Master Trust Working Group concludes that The Pensions Regulator’s authorisation and supervisory regime is a minimum standard of good governance with Master Trusts being able to set a high standard, identifying improvements where possible.
The latest Technical Release Tech 05/20 AAF (updated 6 April 2020) tests good governance of DC Master Trusts under the objective areas of value for members, investment governance, the trustee board, financial sustainability and compliance, scheme management skills, trustee oversight of IT systems and administration processes, data quality and communication and reporting.