12 months ago, we were in the thick of Master Trust Authorisation. No sooner were the festivities out of the way, and the decorations back in the loft, when the 31st March deadline arrived in a flash. I’m pretty sure that the first quarter of 2019 was a blur for many of those involved. 

If we take stock for a moment (and put the enormity of the application process to one side), Authorisation pretty much achieved what it set out to do - a real sorting of the wheat from the chaff - with the outcome being greater consumer protection and much needed market consolidation. It also provided an opportunity for TPR to gain visibility and understanding of the market which they are responsible for. 

Indeed, thinking back, it feels absurd that commercial Master Trusts could be established with such ease and could operate without the regulation, standards and financial backing that are now in place. TPR have told us that a collective £524m has been set aside by Master Trusts to protect member pots from potential wind up costs - great news for the 16m consumers participating in a Master Trust, but it does highlight a disparity in the occupational DC landscape and not all of us currently enjoy these same protections. 

Master Trusts are now considered to be the vanguard of DC best practice and the same principles should be translated across all occupational DC schemes. It’s only a matter of time, in my view. 

It’s clear to see the substantial changes which have occurred in a relatively short period and there’s clearly more to come as the Authorisation regime continues to develop and supervision and enforcement evolves. In what seems like a blink of an eye, Master Trusts have more than halved in number and we can expect further market consolidation, albeit at a slower pace. By the time we leave this decade, it would be reasonable to expect the market to consist of 15 or so commercial Master Trusts, all with substantial scale  

With their Authorisation applications under their belts, we’re now seeing Master Trust providers taking a step back and examining their approach to market and thinking about exactly where their focus should be. We see many refreshing the underpinning commercial models, considering their Trustee boards and ensuring that the go to market strategy is aligned to the prevailing workplace pension climate.

During his time at TPR, Andrew Warwick-Thompson cited that the powers to authorise Master Trusts would be the “cornerstone" of a drive to consolidate the DC market. Despite changes at the top, TPR’s spirit has not waned and the clear message and action has been maintained.

We can expect TPR to continue beating the single employer trust consolidation drum in this coming year as we’ve seen during the last. Throughout 2019 we saw clear, stated ambition from TPR, a new tone of voice which was backed up by action. The intention is to shift poorly governed schemes into well-run alternative arrangements and as we head into 2020, TPR tempo will continue. We’ll also continue to see the ripple effect across the whole market, not just at the smaller end, and once the dust settles I believe we’ll see an authorisation-style regime introduced for all remaining occupational DC schemes.

Many cite 2019 as being the year of the Master Trust, but I’d argue that the majority of the last decade has been about Master Trusts, from infancy to material growth. It’s clear that much progress has been made and there’s still much to do, but we can confidently enter the 2020s in decent shape with a buoyant, sustainable and competitive market. 

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