Mercer Master Trust

IORP II compliant defined contribution pension scheme

 

Master Trust – the DC occupational pension scheme of choice

 

The Irish occupational pension schemes landscape is rapidly changing following the introduction of the new IORP II regime.  IORP II is a comprehensive and wide-ranging suite of legislation that seeks to enhance and harmonise governance and management standards of occupational pension schemes across the European Union.  It introduces new requirements for Irish occupational pension plans, both defined benefit and defined contribution, covering a number of areas including governance and risk management, plan management and member communications, and will place pension plans, trustees and employers under far greater regulatory supervision.

 

The task, and associated costs, of complying with this new regime is leading many employers to explore master trusts as an alternative vehicle for providing retirement benefits to employees.  A master trust allows an employer to retain a high quality and value for money retirement savings arrangement for employees, while at the same time being able to outsource all aspects of management and regulatory compliance. 

 

When it comes to new defined contribution pension schemes, it is clear that the majority are now being established under a master trust.

 

Master trusts currently exist within the general occupational pensions regulatory framework, including IORP II.  Over time, the regulatory framework applicable specifically to master trusts will expand and they will become subject to the highest levels of regulatory supervision and oversight by the Pensions Authority. 

 

Employers, and members, can therefore take comfort from the fact that their retirement savings within a master trust will be subject to the highest standards of governance and compliance.

 

What are Master Trusts? 

 

A master trust is a defined contribution retirement benefits savings vehicle.  Like a regular occupational pension scheme, it is established under a trust, but instead of it containing one pension plan for one employer, the trust contains multiple individual employer plans.  Each of these plans has its own fund which is entirely separate from all the others. 

 

They are established by a commercial provider and have a single board of independent trustees appointed by the provider.  A range of investment funds is made available. 

 

Master trusts are a bundled, fully outsourced solution – everything is done centrally on behalf of the employers who participate.  The primary benefit therefore is economies of scale, reducing costs and delivering time efficiencies associated with running a defined contribution pension plan, without sacrificing quality. 

 

Why consider a defined contribution master trust pension scheme?  

 

Employers seeking to provide high-quality value for money retirement savings solutions for employees, while facing challenging regulatory requirements, are increasingly exploring master trusts.  With a master trust, each employer can design and retain control over the key features of their own plan, including benefit and contribution levels and fund choices.  All responsibility for the plans’ management, administration, oversight and regulatory compliance rests with the professional trustee board and delegated service providers.  

 

Are all Master Trusts the same?

 

The new regulatory environment in Ireland (including IORP II and anticipated master trust specific legislation and regulations) is envisaged to be such that all master trusts will be subject to the same rigorous ongoing scrutiny.

 

However, in choosing a master trust, it is important that employers  carry out appropriate due diligence on a number of specific areas.  The Pensions Authority has advised employers that they need to understand what master trust options are available in the market and ensure that the prospective master trust meets all regulatory standards and expectations.  This includes matters such as how the master trust is capitalised, trustee qualifications, fund charges and choices, member communications and conflicts of interest matters. 

 

Employers should also be considering other factors too, such as the extent to which employers can be involved, the master trust provider’s scale and experience, or the quality of the technology used.

 

Not all master trusts are the same, either with respect to their preparedness for the new regulatory environment, or indeed the specific features and services provided to employers and members.

In addition, it is important to assess the extent to which master trusts offer future proofing to keep pace with evolving market needs.

 

Why choose the Mercer Master Trust defined contribution pension scheme?

 

As the largest and longest established (since 2006) corporate master trust in Ireland, the Mercer Master Trust occupational pension scheme is a tried and tested retirement and death benefits solution delivering strong outcomes to members and employers across a breadth of company sectors and sizes.

 

By combining our scale and expertise, we deliver the most compelling master trust experience in the market.  Mercer is passionate about, and strongly committed to master trusts. We will continue to be one of the key innovators in this field not just in Ireland but also across the globe. 

 


Footnotes

 

Please click HERE for important regulatory and privacy information.

Mercer (Ireland) Limited, trading as Mercer, is regulated by the Central Bank of Ireland.

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