Aviva says the Office of Fair Trading’s report into the UK defined contribution pensions market could “kill off” commercial master trusts.
The OFT warned trustees of multi-employer master trust arrangements “may not be sufficiently independent of the master trust provider to avoid potential conflicts of interest and always act in members’ interests”.
It called for a minimum governance standard to be set by the Government, which would need to ensure trustees are “genuinely able to carry out their fiduciary duty, including by moving scheme assets to alternative fund managers and administrators where that is in the members’ interests.”
Pensions minister Steve Webb has said the Government will act on the recommendations.
Aviva head of policy, pensions and investments John Lawson says: “This will kill commercial master trusts stone dead.
“Commercial master trust providers are pricing their business on the basis they will keep that business for 20 years or longer but if you have independent governors you cannot rely on that.
“For any master trust that is tied to an administrator or an investment manager in the long-term the financials just do not work.”
Legal & General,one of the largest master trust providers in the UK, says it already has an independent governance committee in place for its master trust.
Standard Life head of workplace strategy Jamie Jenkins says: “We have no ownership of Pitman’s, the independent trustee for our master trust, and if they think we are doing a bad job and want to make a change, then they will do that.”