Master Trust

Section 1 of the Pension Schemes Act 2017 defines a 'Master Trust scheme' as an occupational pension scheme which 'provides money purchase benefits (whether alone or in conjunction with other benefits)', 'is used, or intended to be used, by two or more employers', and 'is not used, or intended to be used, only by employers which are connected with each other'. It must also not be a relevant public service pension scheme. Two employers are treated as connected, broadly, where one is or has been a group undertaking in relation to the other within the meaning of section 1161(5) of the Companies Act 2006.

Because a master trust pools unconnected employers into a single scheme, the 2017 Act introduced a specific authorisation regime to protect members. Section 3 provides that 'a person may not operate a Master Trust scheme unless the scheme is authorised', and if The Pensions Regulator becomes aware that a scheme is operating without authorisation, it must notify the scheme's trustees that it is not authorised. NEST is the best-known example of a master trust operating in the UK.