7 key steps in transitioning to a Master Trust

Transitioning from an employer trust scheme or contract-based arrangement to a Master Trust doesn’t need to be onerous as the Master Trust provider will do much of the heavy lifting. Here we summarise the seven key steps involved in the process.

1. Project kick-off (implementation) meeting:

Your selected provider will initiate a project kick-off meeting with key stakeholders. As part of this meeting you’ll be provided with clarity on your roles and responsibilities (including time commitment to the implementation). You will agree your timescales, your communications strategy, your key scheme design features, your automatic enrolment requirements and your selected default investment fund.

2. Review legal documents:

Your legal adviser will review the Master Trust’s legal agreements, including the deed of participation and transfer agreement amongst other items depending on the level of governance and investment transition requirements. This will give you comfort to sign on the dotted line whilst recognising the responsibilities and indemnities required to be a participating employer of the Master Trust.

3. Member communications:

You will review and sign off your tailored member guides, member presentation materials and member website. Any additional communications regarding a change in pension vehicle will run pre or parallel to this.

4. Adapt payroll processes:

Your payroll team or payroll provider will need to adapt their existing processes to direct pension contributions to the new Master Trust scheme. With thorough testing of the new processes and a fully automated approach adopted by Master Trusts providers, this will ensure a smooth transition. Fundamentally any arrangements in respect of automatic enrolment duties and salary sacrifice will be reviewed and included.

5. Don’t forget wider benefit

You will no doubt wish to integrate your existing flexible benefits provider and link seamlessly to the new Master Trust with single sign-on. Alternatively, you can implement a new flexible benefits platform (if required) and consider any additional financial wellbeing offerings from your new Master Trust provider.

You’ll need to review your death in service insurance arrangements - there may be a need to set-up a standalone trust-based group life arrangement by way of example. A call out should also be made to ensure death in service benefits expression of wish forms are completed.

6. Initiate a transfer of members’ existing pension pots:

If your current scheme is a single employer trust scheme, then trustee approval should be sought on a bulk transfer without consent.  The Trustees shall take advice on approving this transfer and communicate their actions with their members. This will no doubt be considered when evaluating the move to Master Trust and should be discussed as early as practical with the Trustee.

If your current scheme is a contract-based arrangement, then the new Master Trust provider will initiate a Direct Offer Transfer Value exercise. Member communications and member consent forms will be handled efficiently by the provider.

7. Asset transition management:

The transition teams for your current scheme and the new scheme will liaise directly with each other - planning each stage of the bulk asset transition, ensuring that out-of-market risks, blackout periods and communications etc are managed effectively, and transition costs are minimised.

To give you an indication of the timescales for transitions, some providers can implement a new scheme in as little as 12 weeks, but typical timescales for implementation average at around 6 months.

It's important when selecting a Master Trust provider to assess the experience and quality of the implementation team. With many experiences of clients transitioning to Master Trusts, we can provide real insights into the quality of the implementation teams for the key Master Trusts.