The answer is no. Initially, transitions will be wholesale master trust to master trust where continuity strategy one has been triggered. However, once we’re in a post authorisation environment, market dynamics will come in to play. This is likely to mean more individual employers moving between master trusts and more single schemes moving to a master trust.

Much of PASA’s work to date has focused on producing Guidance for trustees and administrators to solve existing problems. But we also have our eye on the future. With master trusts, we believe intervention through Guidance can help stop problems before they arise. Although authorisation covers the entire master trust operation when we talk to the market about transition, the focus tends to be on moving funds safely. There’s little discussion about administration, but the Regulator (TPR) wants people to think more broadly. After all, what’ s the point of doing a great job of moving assets if you don’t know who they belong to? It’s taken third party administrators (TPA) a long time to learn how to manage transitions effectively – and even now it’s not perfect. Some master trusts can leverage their TPA associations, but this won’t be available to all and we think there’s a lot to be learned from the TPA’s experience. This can form the core from which we can build for the more complex needs of a master trust transition.

PASA has created a cross discipline Master Trust Transitions Working Group (MTTWG). Its remit is to develop Guidance for:

·       Trustees and administrators in master trust to master trust consolidation

·       Employers thinking of appointing or moving master trusts

·       Trustees of defined contribution (DC) trustees moving to master trust

All of these could be transitioning auto-enrolment or non-auto-enrolment schemes.

We believe the Guidance should still cover ‘distressed’ and planned transition, where the differences in resources and timing could be very different.  But we recognise TPR’s capital requirements mean these should reduce over time.

The Group met for the first time in early December and agreed a starting point of assuming the decision to transition has been made – but advice/support hasn’t been taken. We see our Guidance as a first step, it may be the only step some employers might take! Ideas are still in development, but the Guidance will take account of the various stakeholders involved and their needs. It will also explore the different pressures and how they could impact on master trust operational transition. This includes:

·       Commercial considerations and how they could impact on the administration

·       Investment administration

·       Communications – what you need to communicate when and how

·       How existing contributions are treated

·       Members making non-default decisions

There will be no reinventing the wheel and where Guidance or Regulation/Codes of Practice already exist, these will be cross referenced. A first run through of the areas impacted by administration produced the following:

·       Planning the transition

·       Planning fund transfers

·       Secure data transfer, validation and cleansing

·       Reconciliation

·       Automated processes and manual checks

·       Transitioning between net pay and RAS contribution arrangements

The next step is to break these areas down into groups and ensure we haven’t missed anything vital. The Group will then develop clear and practical Guidance which we aim to publish by Summer 2019.  

Kim Gubler, Chair of PASA