Nearly 15 years ago, I wrote my first article for the pensions press. I was surprised, and my Mum was delighted that it made the front page.
The article was about the future evolution of DC schemes, into new “master trust” arrangements that were appearing at pace, and what this would mean for employers, trustees, and the organisations that supported them.
Fast-forward to 2026, we are living in that future but things are rapidly changing again. We will see huge growth in the DC master trust space, driven by the move from own trust DC schemes into master trusts, , and potentially further consolidation of the existing large master trust providers.
Whilst employers have had a range of master trust providers to choose from over the past decade, the differences between them have often been relatively subtle. However, 2026 is likely to see far greater differentiation emerge across the market, as private asset strategies, in-retirement solutions, member servicing and digital tools, guidance support, and cost structures become much more distinct between providers. These factors will play an increasingly important role in employers’ decision making. We also expect to see further regulation during the year with the Value for Members consultation likely to give employers another comparator to consider.
All of this means we will see the start of a new secondary market in DC master trusts, as employers review who is providing their pension arrangements and consider the merits of moving providers to obtain the best for their members.
At the outset, one of the main advantages of a master trusts was that it offered an effective way to reduce the governance burden on trustee boards and employers, both in terms of time and cost. This remains true in many ways today with regards to specific regulations, particularly around ESG requirements for example.
But it is also increasingly clear that the decision to move to a chosen master trust provider is not necessarily a ‘set and forget’ position, but one that requires ongoing oversight and management from employers.
This need to monitor the chosen master trust, and ensure it continues to remain fit for purpose, is leading more employers to set up an internal governance committee. The role of such committees is to ensure the provision remains appropriate across a rapidly evolving regulatory landscape, and that the employer is receiving value for its investment in members’ futures. These internal governance committee can also challenge providers on cost, and, more importantly, on the value it is delivering through service, member options, and, critically, investment returns.
These committees are usually constituted of ex-trustees, senior employees, professional trustees and ideally will have professional advisers supporting them. For some employers, an internal governance committee was an early initiative and is now well established. Recent years have seen many others now joining this trend, as they realise that the DC provision for their employees constitutes very large sums of money and will, for many members, be their sole source of retirement income in the decades to come.
The risks to employers of not maintaining this oversight are not insignificant. One particular risk is the potential for future challenges from employees for poor performance or service from the provider selected for them. There is also the potential impact on recruitment, with new staff increasingly focused on retirement provision offered by companies and organisations when looking at job opportunities. And ultimately the failure to provide the best possible benefit to their staff could impact peole’s ability to retire at a time of their choosing..
With all this in mind it feels we are again at a turning point in the evolution of DC schemes and their governance. Internal governance committees are likely to become a standard feature of large workplace arrangements.
To be effective these committees will need highly skilled professionals, with experience of the master trust market to offer challenge to providers and to hold them accountable. They will need robust support, which remains in place for the long term, and to ensure the decision-making process is properly documented, to protect against potential challenges in the future.
And these committees will need advisers who understand the market, so they can assess and benchmark services, which will include both subtle and dramatic differences in the increasingly complex investment offerings.