NEST's Tim Jones hits back at criticism of the ‘master trust model'
Pensions may not raise heart rates quite like the Jabberwock, but those of us working in the industry understand about the fear of the unknown monster. We face a very real challenge of demystifying pensions and quelling people's concerns about what can seem an opaque and confusing landscape.
The master trust in itself is not a panacea. For starters there is not really a master trust ‘model'. All master trusts are different, which is part of what makes standardised comparisons difficult. And master trusts are only one of the types of scheme that employers can use for auto-enrolment (AE).
It's unsurprising that only around half of small and micro employers surveyed by The Pensions Regulator (TPR) think that choosing a scheme will be easy. We also know from our own research that employers are particularly concerned about compliance. Attempts to assess scheme quality and governance are therefore welcome and important in helping ease some of these concerns.
For example, schemes that are Pensions Quality Mark Ready have been independently assessed and found to have good governance, low charges and clear communications. In addition to this, TPR has asked trust-based schemes to report against the quality features set out in the Master Trust Assurance Framework by the end of this financial year.
As with all audits, this is an important learning opportunity rather than just a box-ticking exercise. The real value is in the rigour of self-assessment and self-improvement. By taking the time to understand and face head-on any challenges thrown up by the guidance, schemes like the National Employment Savings Trust (NEST) can implement changes and take forward improvements that will ultimately benefit our members. We're committed to this being a transparent process as well as a useful one and have published a governance statement setting out the steps we're taking ahead of undergoing independent auditing.
Alongside the statutory guidance and frameworks there are also a number of independent third parties, like the financial services research agency Defaqto, that assess a range of different factors from fees and charges to investment approach. These platforms compare a variety of different types of pension scheme and some master trusts, including NEST, score highly.
Employers understandably want to get this right. The level of support for AE is encouraging, particularly among small and micro employers, and many feel it's their duty to help their workers save towards retirement. But as staging progresses just one person will be responsible for implementing AE in many cases. Their experience and understanding of pensions could really influence how their colleagues respond.
We therefore want to take every opportunity to improve standards, increase transparency and aid understanding so employers can make informed decisions based on what they and their workers need. Rather than stoking nightmares, let's let in more light. That's the best way to prove there's nothing to fear.
Tim Jones is chief executive of NEST
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