I have been prompted to post this thought by a couple of conversations I have had recently with pension providers. There are a number of providers that both Master Trust and Contract based arrangements (Aviva might offer a Group Personal Pension Plan which is contract based scheme where The Peoples Pension will offer a Master Trust).
So what I hear you say.....
Well with the new pension freedoms announced in the budget members/employees will be asking many questions in relation to these new freedoms. They will be asking these questions of employers/advisers of such schemes after April of 2015.
So what I hear you say again....
Well, one of the many differences between the two arrangements is that a Master Trust is an arrangement between the employer and the provider and members are predominantly serviced/looked after through the employers/adviser attached to the Master Trust. A Contract based scheme is set up through the employer but each member has a contract with the provider and can go direct to that provider to ask questions around their contract and its functionality.
It therefore strikes me that there may be a case for caution when an unregulated adviser recommends a Master Trust to their clients. This is because if a Master Trust is set up then potentially the employer concerned will carry more responsibility for answering employee questions than if a contract based scheme is chosen. In turn this may lead to more employers asking the non regulated adviser to provide support in answering these questions, after all they recommended the scheme.
I am sure that the providers will help in some respects (lets see where we are in Jan 2016 when 137,000 businesses stage in one month!) but wondered what others thoughts were in this area bearing in mind many accountants are talking about recommending schemes or forming alliances with the Master Trust providers for all of their clients.
How will a non regulated adviser answer an employee's questions if they have recommended a Master Trust over a Contract Based scheme for their clients?