At the heart of reform: The expanding role of master trusts
Sharon Bellingham
Master Trust Lead, Scottish Widows.
Policy change and redefined workplace pensions
Once a niche solution, master trusts are now a dominant force in Defined Contribution (DC) workplace pensions, accounting for over 90% of trust-based DC membership*. They remain a key driver of growth across the UK pensions market.
This growth, driven by policy shifts, market consolidation and rising expectations, is set to accelerate significantly and, coupled with their evolving role, master trusts are quickly becoming a central component to supporting broader financial wellbeing.
Scale, reform and responsibility
The Pension Schemes Bill currently before Parliament, along with wider pension reforms, mark a turning point in pensions policy and regulation, with significant implications for master trusts. In this new environment, scale is not just desirable, it’s essential. The focus and shift toward “fewer, bigger, better-run schemes” is accelerating consolidation, and with this, the role of commercial master trusts, their trustees, and providers is evolving rapidly. Regulatory expectations are rising, and so is the need to continually deliver better outcomes for members.
As Defined Benefit (DB) pension provision continues to decline, DC schemes are becoming the primary long-term savings vehicle for millions. But adequacy remains a critical issue. Nearly 15 million people are under saving for retirement and there is a 48% gender pensions gap in private pension wealth between women and men. While Automatic Enrolment increased participation, contribution levels remain low and around half of private sector workers are only saving the minimum required.
This is no longer a theoretical concern. It’s a complex, urgent societal challenge.
The Government’s renewed focus through the revival of the Pension Commission is welcome. The Commission will explore the barriers which are preventing adequate saving, will holistically examine the pension system and set out recommendations for a system that is fit for the future. This includes tackling the adequacy issue head on, as well as pension inequality and the role of the state pension, which remains a crucial part of retirement income for many.
New regulatory era
Even before the Commission begins its work, we’ve been seeing a stated shift in regulatory approach. The Pensions Regulator (TPR) is adopting a more holistic, prudential stance. Its new master trust supervision strategy spans digital, data, and technology, with an “innovation support service” designed to protect and enhance saver outcomes.
In the face of all this change, commercial master trusts will be expected to do much more than manage retirement savings. They will be expected to lead on governance, engagement and innovation, becoming integral to a broader financial ecosystem.
With the arrival of pension dashboards (firstly the government version, followed by provider-led offerings) master trusts will serve as gateways to broader financial wellbeing. These platforms will also support emergency savings, budgeting tools, insurance, investment products and all-important financial education.
There is a growing need to move beyond siloed products and fragmented regulation, towards integrated solutions that reflect the real-life needs of individuals. Members will expect seamless, personalised support across their financial lives. To deliver this, regulatory frameworks must evolve, empowering trustees and providers to offer integrated, member-centric solutions without friction.
The Government is exploring how members can benefit from targeted support, simplified advice, and full financial advice – not just at retirement, but throughout their savings journey, as our Head of Pensions Policy, Pete Glancy, explored in his recent article A clearer view of ‘advice gap’ proposals.
Raising the bar on governance and innovation
TPR’s focus on professionalisation and outcome-focused governance is already raising expectations. Its strategy for excellence and corporate plan aims to improve trusteeship for this new pensions landscape.
Master trusts are inherently complex, serving multiple employers and diverse workforces at scale. This demands trustee boards that are multidisciplinary, data-literate and ready to embrace an evolving landscape and evolving member needs. Governance is no longer a compliance function, it’s about driving engagement, innovation and better outcomes.
This includes using smart tools, gamification and AI to support members throughout their savings journey, as well as delivering better member outcomes by embracing investment innovation. Trustees are increasingly exploring opportunity for further diversification and sustainable investing, ESG principles, and private markets, balancing complexity with member interests and requiring new skills and knowledge.
The anticipated requirements for trustees to offer decumulation options will drive a need for clear strategy in how they support members, further reinforcing their role in lifelong financial wellbeing.
A new mandate for master trusts?
In a consolidated market, scale brings both opportunity and responsibility. As concerns around retirement adequacy intensify, government and policymakers may increasingly look to master trusts to help address the UK’s pension adequacy challenge. Trustees may find themselves playing a more proactive role in supporting public policy objectives, and early signs of this are already emerging.
To truly support members in a holistic way, regulation must evolve. The current frameworks are heavily focused on scheme resilience and compliance and a shift toward enabling innovation will be welcomed.
A defining moment
This is a defining moment for master trusts. The pace of change is accelerating, and expectations are rising. But with the right regulatory support and a continued focus on innovation, governance, and member outcomes , master trusts are well-positioned to lead the next chapter of UK retirement reform.
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