New pensions law compliance requirements (contained in the IORP II Directive), which are imposed on trustees of occupational pension schemes, will start to be enforced by the Pensions Authority for most schemes from the beginning of next year.
Many of the new requirements are already law since April 2021. 1 January 2023 is the date from which the Pensions Authority has said it will focus on monitoring compliance for the majority of schemes.
The looming deadline has seen a growing number of employers make the decision to wind-up their existing scheme and move to a master trust. The differentiating feature of a master trust is that it is established by a founder, not by an employer, and unrelated employers can set up their own section in the master trust. There is one trustee board for all of the sections. The obvious advantages are that compliance and other costs are spread across all sections and, proportionately, may be lower than if a single employer scheme was bearing those costs. Economies of scale will also usually lead to better investment options and lower charges.
In this publication, we consider the master trust structure and what transitioning to the new process could be like for employers.
If you are considering a move to a master trust, or need assistance in meeting the new IORP II compliance requirements, please contact any member of ALG's Pensions team or your usual ALG contact.
