ICAEW: Assurance reporting on Master Trusts – Sackers’ response to consultation

Background

The ICAEW is consulting on a revision of its Technical Release on Assurance reporting on Master Trusts.

Originally released in 2014, the framework for assurance reporting on master trusts produced in partnership with TPR is designed to help trustees of DC Master Trusts demonstrate to potential and existing customers that their scheme is being run to a high standard.

The proposed update takes into account recent changes to DC guidance and legislation, including the removal of references to the Pensions Regulator’s (“TPR”) earlier DC “quality features”. It also takes into account experiences from applying the current framework.

In this response

• General comments
• Response to specific questions

General comments

The market has moved on since the original master trust assurance framework was put in place: legislation, regulation and guidance have all been updated; there are now more employers and more members in master trust arrangements than before; IGC “cousin” reports for contract based schemes are available as comparators. The risks are different, and the background is different. We therefore welcome the updated Supplement.

The continued provision of sample paragraphs for a chair’s statement, and the control objectives which now fit within the new legislative framework, are useful. The continued recognition that procedures to meet the control objectives need to be scheme specific is also helpful, reflecting the various shapes of master trusts and their different memberships.

As legal advisers to trustees, employers and providers of workplace pension schemes, our comments relate to those aspects of the consultation which are relevant to our practice. We have not sought to answer every question in the consultation.

Response to specific questions

Question 1: Do you agree that the realignment of control objectives in the revised Supplement to the Regulator’s revised DC Code and DC Guides is appropriate? If not please explain why.

We welcome the revision of the Supplement in the light of the changes in DC legislation so that the framework aligns more closely with governance standards expected of schemes since April 2015, and with TPR’s updated DC Code.

Question 2: Are there any additional control procedures which should be included in the revised Supplement?

It has been proposed that the forthcoming Pensions Bill 2016 should include provisions dealing with the closer regulation of master trusts. Alignment with this legislation will therefore be likely to be required in due course, and may entail additional control objectives.

Question 4: The revised Supplement is effective for all Type 2 reporting periods commencing after 31 December 2016 and Type 1 reports that fall after this date. Do you consider the effective date of the revised Supplement and the transitional arrangements (set out in paragraph 30) appropriate? If not please explain why.

The reporting dates seem appropriate, subject to any changes that the draft Pensions Bill 2016 may make necessary.