PQM Ready is our standard for multi-employer trust-based schemes.
Master trusts are a major part of the pensions landscape as auto-enrolment has phased in to all employers. Many new master trusts have entered the market, and it's important that they can deliver good outcomes for savers. We want to recognise high quality master trusts.
PQM Ready is also helping to drive up standards amongst master trusts. The standards are demanding and go beyond those of the Pensions Regulator. We have seen master trusts change their scheme rules so that they can meet the PQM Ready standards.
To qualify for PQM Ready, a master trust needs to meet certain standards on governance and communications, summarised below:
The trustees must be fully independent. They have the power to make, break or vary arrangements with the scheme's fund managers and administrators. The trustees, or any company associated with the trustees, cannot have any commercial interest in the master trust. This is to ensure that trustees can always act in the members' interests and independently of any commercial sponsor or founder. We would not normally regard participating employers or their employees as having a commercial interest. Independent trustees do not have to come from a professional trustee company.
Trustees must also undertake training in line with the Pensions Regulator's Code on Trustee Knowledge and Understanding . Trustees have to regularly review key DC issues at their meetings.
The scheme also needs to have clear and engaging communications to members when joining the scheme, ongoing, leaving and for members approaching retirement
All employers using the scheme must be able to access a default investment option with charges no higher than 0.75%. We appreciate that some employers may opt for a more expensive default, but if they do so it must be their own choice. The scheme needs to offer a simple range of investment options or a default option.
Many employers will be using a master trust for auto-enrolment, and PQM READY can help them to pick a high quality scheme. Master trusts with PQM READY will have independent governance, reasonable charges and strong communications. Employers can find a list of master trusts which have been assessed as meeting the PQM Ready standards.
An employer using a PQM Ready master trust can apply for PQM or PQM plus if they meet the contributions standard, via a simple application process.
We are not currently accepting new applications for PQM Ready.
Use the links below to find out more, or contact us directly if you have further questions.
T: 020 7601 1736
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We welcome the Pensions Quality Mark as an independent benchmark to help employers with this important communications task, and we?re delighted to practice what we preach in securing the Pension Quality Mark PLUS for our own scheme.
Lisa Sarjeant - HR Director, CIPD