Friends Life has launched a pensions master trust in response to growing scrutiny of the governance arrangements offered by schemes used for automatic enrolment.
The Department for Work and Pensions is currently consulting on proposals to introduce minimum quality standards for auto-enrolment pension schemes. This could include a charge cap of 0.75 per cent, although the implementation of this cap has been delayed until April 2015 at the earliest.
Two versions of the Friends Life master trust will be available to employers – a “core” version and an “enhanced” version.
The core solution is a standardised “off the shelf” proposition which uses Friends Life’s core fund range, while the enhanced offering allows employers to bespoke the literature and fund range they use and appoint their own investment adviser.
Friends Life has selected Pitmans Trustees as the sole trustees of the master trust. Pitmans has appointed KPMG as investment advisers and Squire Sanders as legal advisers, with Friends Life providing administration and investment platforms.
Friends Life corporate benefits head of marketing Martin Palmer says: “We have been looking at master trusts for a while but the reason we are now launching a proposition is we see a significant opportunity given the focus there is on governance at the moment.
“We wanted to offer something that gives employers some of the flexibility of a contract-based scheme within a trust-style governance structure.
“We think independent governance is important which is why we’ve appointed Pitmans. There is no point setting up a master trust and appointing your own directors as trustees.”
Palmer says charges will vary from scheme to scheme but will be compliant with a 0.75 per cent cap.
A number of pension providers, including Legal & General and Standard Life, have launched master trusts to compete with Nest, the scheme set up by Government for auto-enrolment.
Now: Pensions and B&CE’s ‘The People’s Pension’ also offer alternative master trust propositions.