The Pension Schemes Bill published on 20 October 2016 will introduce a prohibition on operating a master trust scheme (MTS) unless the scheme is authorised by the Pensions Regulator.


Existing MTSs will have six months from commencement of the Act to apply for authorisation. The definition of a MTS contained in the Bill as originally introduced into Parliament was broadly an occupational scheme providing money purchase benefits where the scheme is used or intended to be used by two or more employers who are not all connected with one another. "Connected" is defined by reference to the Companies Act 2006. Since the Bill was originally introduced, various amendments to it have been tabled, including amendments to exclude from its scope schemes where the only money purchase benefits are AVCs, and to allow for further exemptions to be provided for by regulations.

We do not yet know what the final definition of the Bill will be, or whether there will be an exemption aimed at SSASs. In the absence of a SSAS exemption, there appears to be potential for a SSAS to fall within the definition of a MTS where two or more employers contribute to the SSAS but those companies are not in the same group and are therefore not "connected" for the purposes of the legislation.

The Bill sets out various matters on which the Regulator must be satisfied before authorising a MTS, including that persons involved with the running of the scheme are "fit and proper", that the scheme is financially sustainable and has adequate systems and processes to ensure it is run effectively. The Regulator will have an ongoing monitoring role in relation to authorised MTSs and will have wide information-gathering powers.

The Bill sets out various "triggering events" in relation to a MTS which must be reported to the Regulator within set timescales. Broadly, these are events which may lead to the winding-up of a MTS, or which involve a person involved in the running of a MTS ceasing to be involved/becoming insolvent. A triggering event results in restrictions on the scheme trustees' powers and gives the Regulator greater powers to become involved in the running of a MTS.

One controversial aspect of the Bill is that it appears to impose a requirement to report triggering events from 20 October 2016 onwards within 7 days of the triggering event occurring, notwithstanding that the final wording of the Bill cannot be known with certainty while it is still passing through Parliament. It may be that the relevant provisions will be amended before the Bill receives Royal Assent, but anyone involved in the running of a scheme which may fall within the MTS definition would be well advised to familiarise themselves with the triggering events as currently drafted, and consider reporting them to the Regulator within 7 days if they occur, notwithstanding that the Bill has not yet become law.

Key contacts

Jade Murray

Jade Murray

Partner, Pensions
United Kingdom

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