A master trust is a defined contribution occupational pension scheme used by two or more unconnected employers, and since 1 October 2018 no one may operate one without authorisation from The Pensions Regulator. That single sentence explains why the market consolidated from hundreds of schemes to the 29 currently on TPR's authorised list.
The statutory definition
Section 1 of the Pension Schemes Act 2017 sets five limbs. A master trust scheme is an occupational pension scheme that provides money purchase benefits, whether alone or alongside other benefits; is used or intended to be used by two or more employers; is not used only by connected employers; is not a relevant public service pension scheme; and is not a collective money purchase scheme.
Two of those limbs do real work. "Not used only by connected employers" is what excludes a group's own multi-company scheme from the regime. And "money purchase" is why the standard auto-enrolment vehicle is a master trust — employers needed a ready-made scheme they did not have to establish themselves.
For 2026/27 the auto-enrolment thresholds are unchanged again: an earnings trigger of £10,000, with qualifying earnings running from £6,240 to £50,270.
Authorisation: five criteria, now becoming seven
Section 3 is blunt — "a person may not operate a Master Trust scheme unless the scheme is authorised" — and breach attracts civil penalties under section 10 of the Pensions Act 1995. TPR must notify the trustees, and that notification is itself a triggering event.
Section 5(3) sets the criteria TPR must be satisfied of:
- Fit and proper persons. Everyone involved in the scheme — trustees, funders, strategists, administrators — must meet the test;
- Financial sustainability. The scheme must have sufficient financial resources to meet set-up costs, running costs and the costs of winding up without recourse to members' pots, supported by a business plan;
- Scheme funder requirements. Each funder must meet the section 10 conditions, broadly that it is a body corporate or partnership carrying on activities that relate only to the scheme, with accounts;
- Systems and processes. Those used in running the scheme must be sufficient;
- Continuity strategy. The scheme must have an adequate one — how members' interests are protected if a triggering event occurs, including the levels of administration charges.
Two further criteria were added by the Pension Schemes Act 2026 on 29 April 2026 and are being brought into effect: sufficient investment capability under a new section 12A — appropriate systems for managing investment strategy and monitoring outcomes, appropriate systems for effective governance, and appropriate strategies for recruiting and retaining expert staff — and a scale requirement under section 12B, assessed by reference to the Pensions Act 2008 conditions, with the mechanics left to regulations.
Both are commenced for specified purposes only and section 12B depends on regulations. If you are assessing a scheme now, treat investment capability and scale as the direction of travel, not yet as settled tests.
Ongoing supervision
Authorisation is not a one-off. Three duties run continuously.
The supervisory return. Under section 15 TPR may require the trustees to submit one, specifying the information, form and a period of at least 28 days. Trustees may not be required to submit more than once in any 12-month period, and TPR operates it as an annual return. Failure attracts section 10 penalties.
Significant events. Section 16 requires notice in writing to TPR as soon as reasonably practicable — and the duty falls on a striking range of people, not just the trustees. It reaches anyone with power to appoint or remove trustees, anyone with power to vary the trust, scheme funders and strategists, managers of administration services, and the scheme's legal, financial and actuarial advisers. Notification is not a breach of any other duty, and legal professional privilege is preserved.
Advisers to a master trust should know they carry a direct statutory reporting obligation to the regulator. It is not discharged by telling the trustees.
Accounts and the list. Section 14 requires annual accounts. Section 13 requires TPR to maintain and publish the list of authorised schemes, which is how an employer checks a provider before appointing it.
Triggering events and the two continuity options
Section 21 sets out ten triggering events. They cover TPR warning and determination notices about withdrawal of authorisation, notification that a scheme is not authorised, an insolvency event affecting a scheme funder, a funder being unlikely to continue as a going concern, a funder deciding to end or actually ending its relationship with the scheme, a decision that the scheme should wind up, an event requiring or permitting wind-up, and a trustee decision that the scheme is at risk of failure.
Then — and this is where most summaries go wrong — there are two continuity options under section 23, not three:
- Continuity option 1 — transfer all members' accrued rights and benefits out of the scheme and wind the scheme up, in accordance with regulations;
- Continuity option 2 — resolve the triggering event.
Option 1 is mandatory in specified circumstances, broadly where authorisation is withdrawn. Otherwise the trustees choose. The supporting duties are substantial: TPR must approve the implementation strategy, trustees must pursue the chosen option, the scheme may not be wound up other than under option 1, and there is periodic reporting throughout.
Two prohibitions protect members during a triggering event period. The scheme may not take on new employers, and it may not increase charges. TPR can also issue a pause order.
What this means in practice
For an employer choosing a scheme, the authorised list is the first filter and the only one that is definitive. Beyond it, the questions worth asking are about the things authorisation tests: who the scheme funder is and whether it could sustain a wind-up, what the continuity strategy says about charges, and whether the administration systems have been tested at the scheme's actual scale.
For trustees and providers, the practical burden is the supervisory return and the significant-events regime, and the discipline is keeping the business plan current rather than refreshing it for the return.
One technical point that surprises people: because a master trust is by definition money purchase, it is exempt from the duty to appoint a scheme actuary under section 47 of the Pensions Act 1995 — that duty is in practice a defined benefit duty. Our guide to actuarial services covers where it does bite.
Acumon works with pension schemes and their sponsors through pension scheme audit and internal audit, with risk management and governance support for trustee boards. If you are an adviser to an authorised master trust, the section 16 notification duty is worth confirming you have a process for.