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Master Trust

The consultation period ended on 11 September 2020. IMI will write to you later this month to confirm the decision.

FAQs were last updated on 20 August

Frequently Asked Questions

What is a Master Trust?

13/07/2020

A Master Trust is an authorised pension arrangement that allows groups of employers to combine their pension plans under a single umbrella trust to provide pension benefits for their employees. Two of the main advantages of this group collaboration are increased buying power and lower running costs for the pension schemes. Master Trusts are normally operated by a professional and independent Trustee Board.

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Why did IMI choose a Master Trust as the proposed pension savings arrangement?

13/07/2020

IMI and the Trustee Directors reviewed the current IMI pension arrangements to see what options are available to provide flexibility for members, together with security and good governance. Master Trusts offer more strength in numbers, flexibility through combined buying power, lower costs and good governance through the Trustee Board.

Master Trusts also have well developed member support and online tools and invest in the latest technology, meaning you can:

  • Manage your account online;
  • Monitor your investments; and
  • Change your personal details

They also offer strong future-proofing against future changes in the pensions environment.

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How does the MMT compare to the RSP?

13/07/2020

Some things wouldn’t change – the IMI benefits and contribution levels would stay the same. As the new provider, the MMT would be responsible for looking after your pensions account and they could pay your benefits when you take them.

The differences you would see include:

  • More choice of investments
  • Lower investment charges
  • Improved retirement options, including a drawdown option; and
  • Access to online support tools.
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Who are the administrators of the MMT?

13/07/2020

The MMT is managed by Mercer. It already has 43 participating companies, representing around 88,000 members and total assets in excess of £2.4bn. It is governed by an independent Trustee Board.

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If the proposal goes ahead, will my previous IMI pension savings be transferred to the MMT?

13/07/2020

Any pension savings in the RSP would be transferred to the MMT towards the end of the year.

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Will I have to pay a fee for my pension to be transferred to the MMT?

13/07/2020

No. Any transaction costs incurred as a result of transferring your pension savings in the RSP would be covered as part of the transfer to the MMT.

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If the proposal goes ahead, will I be able to switch my investments within my MMT account?

13/07/2020

Yes. You would be able to switch your investments within your MMT account online. You could do this at any time, through your device or computer.

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Is IMI changing its pension contribution structure as part of the proposed transition to the MMT?

13/07/2020

No. At this time, there are no proposed changes to the current employee and employer contribution levels.

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Would I be able to take all of my MMT account as a cash lump sum when I retire?

13/07/2020

This is an option available to anyone from age 55. However, please note that there may be tax consequences of taking all of your account as cash. You can take up to 25% of the value of your pension benefits tax free, and the remaining 75% will be taxed at the appropriate rate of income tax in the year that the lump sum is taken. This may mean that tax would be paid at a higher rate than you would normally pay, and could also affect your annual allowance for future pension savings.

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Would I be able to drawdown my Mercer Master Trust account at retirement?

13/07/2020

Yes. There is a ready-made income drawdown solution within the Mercer Master Trust which would enable you to access your pension savings at no additional cost.

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Would I be able to partially retire and use only part of my pension fund?

13/07/2020

Yes. The Mercer Master Trust offers its members flexibility in how and when they use their pension savings. This includes the ability to start taking drawdown on part of your pension savings whilst still in employment and continuing to contribute.

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Is there a governing Regulator for pension schemes?

13/07/2020

The Pensions Regulator regulates UK occupational pension schemes like the RSP and the MMT. The Pensions Regulator also oversees the authorisation regime for Master Trust pension arrangements, such as the MMT. The Pensions Regulator's contact details can be found on its website.

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I am a deferred member, why can I not give feedback?

13/07/2020

IMI only has to legally consult with active members and members who are eligible to join the RSP about the change to IMI’s existing pension arrangements. There is no requirement to consult with deferred members about moving their existing accounts to a new provider.

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If the proposal goes ahead, will I be able to transfer other defined contribution (DC) pensions into my MMT account?

13/07/2020

The MMT currently allows you to transfer in any other DC pension savings that you have previously built up in other plans or schemes with other employers. You may want to speak to a financial adviser before choosing to transfer in previous savings, just to check that it’s the right thing for you to do.

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Where can I see the performance of the MMT funds?

13/07/2020

The performance of the MMT funds can be found in the quarterly fund factsheets using the links in the following question. More regular fund performance information is available to MMT members and can be accessed at any time via their personal online account.

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Would I be able to transfer my MMT account overseas?

13/07/2020

Yes – subject to the country you wish to transfer your MMT account to, and whether the scheme can accept the transfer value. However, please note that this is a complex area and you should consider seeking independent financial advice both in the UK and the country you wish to transfer your MMT account to. You can find details of a local Independent Financial Adviser for advice at moneyadviceservice.org.uk. Please also be vigilant and look out for pension scams.

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I’m going through a divorce, would the MMT charge me for a pension sharing order if the proposal goes ahead?

13/07/2020

Yes, there would be a charge for a pension sharing order as is currently the case. It would vary depending on whether an internal or external transfer is taken by your ex-spouse.

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Will my money be safe if the proposed move to the MMT goes ahead?

13/07/2020

The security of your pension benefits with the MMT is subject to the regulatory protections for Master Trusts.

If anyone involved in providing services to the MMT (for example, Mercer) failed or was unable or unwilling to provide services, the Trustee would appoint new providers. MMT member assets are held by the MMT Trustee on your behalf.

In the unlikely event of the failure of the investment managers, the MMT Trustee may be able to make a claim for compensation under the Financial Services Compensation Scheme (FSCS). This is because MMT funds are held in an insured, regulated pooled investment vehicle. For investments made through a life policy, the MMT Trustee in certain circumstances may be entitled to make a claim to the FSCS in relation to 100% of the value of the policy. The MMT Trustee receives annual reporting on the security of assets with all of the fund managers to ensure that they remain comfortable with the security of the assets.

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What if I die before retirement?

13/07/2020

In the MMT, if you die before you take anything from your pension it will usually be paid as a lump sum to your nominated beneficiaries. You should complete a nomination of beneficiaries form in your MMT account.

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What are IMI's objectives for this proposed change?

22/07/2020

IMI’s objectives are:

  • More flexibility and choice for members,
  • Lower investment costs for members, and
  • Lower running costs for IMI.
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Could the Master Trust be another financial passing phase?

22/07/2020

IMI believes that Master Trusts offer a long-term solution to the present and future needs of employees and the company. IMI has always, and will continue to, review its pension offering to ensure it meets its needs, and the needs of employees. That means there may be further changes to the pension arrangements in future if better options become available.

IMI is proposing this change because it believes the Master Trust would provide more flexibility and choice for you, as well as having lower running costs.

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In a Master Trust, each participating employer has its own section and its own separate agreement with the Master Trust. Any changes to one company’s agreement would not affect the other companies. If another employer decided to leave the Master Trust, went bankrupt, or made changes to their section of the Master Trust, this would not affect IMI.

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You've highlighted the benefits, but what are the risks?

22/07/2020

Major risks, such as insolvency are protected in the Master Trust model. For example, The Pensions Regulator requires that all authorised Master Trusts maintain and evidence access to sufficient capital to ensure that even in a worst-case scenario, such as the Master Trust provider becoming insolvent, capital would be available to support the ongoing operation of the scheme. Under law, members' funds cannot be used to meet arising costs in such an event. Should a significant continuity event occur, the MMT Trustee would seek to move member assets to an alternative provider in the market and minimise any disruption in service to members. No liability is attached to any participating employers above paying member contributions due.

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How sure are we that it is so much better than running our own RSP?

22/07/2020

The MMT already has 43 participating companies, which represents around 88,000 members and total assets in excess of £2.4bn. This means the MMT:

  • has much greater buying power than the RSP, so can negotiate lower investment charges to benefit members
  • offers a wider range of investments; and
  • provides increased at-retirement options to you

when compared with the RSP.

IMI is not alone in coming to this conclusion. A recent Willis Towers Watson report stated that over the seven years since Master Trusts have entered the DC pensions market, 22% of companies have moved to this sort of arrangement and this number is predicted to rise to 35% over the next two years.

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If a Master Trust is a better option, why are we not considering the LifeSight (run by Willis Towers Watson), as they are our existing provider?

22/07/2020

IMI completed an extensive review of Master Trust providers. This review included LifeSight. IMI assessed and ranked the providers on a number of measures, including the:

  • administration services offered,
  • quality of the governance structures,
  • investment options that would be available to members,
  • retirement options offered, and
  • member support and communications.

This ensured that the review was fair and that no provider had an advantage over another. The MMT ranked top in this review – IMI considered it better than LifeSight.

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What control will IMI have over the trustees and the design and governance of the scheme?

22/07/2020

Trustees

IMI would not have control over the individuals that sit on the MMT’s Trustee Board. However, The Pensions Regulator has strict rules about how Master Trusts choose their Trustees, which the MMT has to follow.

The Trustees must be independent. This means the majority of Trustees, including the Chair, must be independent of any company that provides services to the MMT. When choosing Trustees, Master Trusts must use an open and transparent process – and they must describe that process in the Chair’s Statement which is made available to all members. Once in post, Trustees’ roles are term-limited to five or ten years. Trustees' fitness and propriety is reviewed on an annual basis.

Scheme design and governance

IMI would have its own section in the MMT which would be completely separate from other companies’ sections. IMI would be able to choose, and change at any time, the:

  • level of contributions that members and IMI pay (with the consultation of members), and
  • MMT investment options available to its members, including the default option, and
  • the communications that IMI issues to members.

IMI would also continue to be responsible for enrolling and re-enrolling new and existing employees into the MMT.

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Does Mercer own the master trust, if not who does? What is their financial security like and what are their future plans?

22/07/2020

Mercer owns and runs the MMT. The Pensions Regulator requires that all authorised Master Trusts maintain and evidence access to sufficient capital to ensure that even in a worst-case scenario, such as an insolvency event, capital would be available to support the ongoing operation of the scheme. Under law, members' funds cannot be used to meet arising costs in such an event. Should a significant continuity event occur, the MMT Trustee would seek to move member assets to an alternative provider in the market and minimise any disruption in service to members. No liability is attached to any participating employers above paying member contributions due.

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What additional costs will there be for allocation, accessing drawdown and taking a variable income in the MMT?

22/07/2020

In the MMT, there would be no additional cost to you for moving into drawdown and taking an income. There may be costs if you decide to move to a different fund, due to potential transaction costs and different fund charges. However, if you remain in the same fund as the one you used at the end of the drawdown glide path (the Mercer Diversified Retirement Fund), you can remain in this fund post-retirement, with no transaction costs or changes in charges. There are additional charges should you wish to undertake additional services, such as annuity broking or advice, as outlined in the table below.

Annuity Broking
Pre-retirement report £120+VAT
At-retirement report and implementation £300+VAT
Alternatively, these charges can be by means of a fee of 2% of the purchase price of the annuity, capped at a maximum fee of £3,000 per annuity.
Simplified Advice
Stage One Advice £200+VAT*
Stage Two Advice and implementation £400+VAT*
Annual Review £100+VAT
In-scheme Advice (QCF 4)
Stage One Advice £250+VAT*
Stage Two Advice and implementation £550+VAT*
Annual Review £100+VAT
Digital advice
Access to fact finding, modelling and exploration tools Free
Advice report £350
Full Independent Financial Advice
Initial advice and recommendation Costs vary depending on the complexity of the individual circumstances and will be fee based with an annual management charge levied on assets under advice.
Implementation of recommendations
Ongoing fee including annual reviews

*VAT will usually be levied at zero rates. This means you will usually not pay VAT.

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Does Mercer offer members access to an IFA?

22/07/2020

In the MMT there are a number of ways you can get advice on your options. These options, and the associated costs, are outlined in the previous question.

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What would be the impact on the IMI Deferred Fund if this proposal goes ahead?

22/07/2020

The IMI Pension Fund was established on 1 October 1970 and closed to future accrual on 31 December 2010.

If you have benefits in the IMI 2014 Deferred Fund, these will not be affected if the proposal goes ahead. The benefits you built up before 31 December 2010 would remain deferred in the Fund until you choose to take them.

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Who would manage the Deferred Fund?

22/07/2020

The Trustee of the IMI UK pension arrangements is IMI Pensions Trust Limited. The Directors of the Trustee Company would continue to look after the IMI 2014 Deferred Fund if the proposal goes ahead. There would be no link between the MMT and the IMI 2014 Deferred Fund.

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Would it mean the costs increase for the Deferred Fund as the RSP funds are managed elsewhere?

22/07/2020

No. The funding level of the IMI 2014 Deferred Fund would continue to be measured every three years through an actuarial valuation. The actuarial valuation measures the Fund’s assets (money invested in the Fund) against its liabilities (the cost of providing members’ benefits both now and in the future). The Fund’s assets never have, and never would, include individual members’ accounts in the RSP.

If the Fund does not have enough assets to cover the liabilities, the Trustee Directors agree a recovery plan with the Company. Under the recovery plan, the Company pays significant contributions to the Fund in order to increase the level of assets. This arrangement would continue unchanged if the proposals went ahead.

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Is there any point in "consulting" on IMI pension changes when members do not have a vote in whether this goes ahead or not?

29/07/2020

Yes. IMI is consulting with you because you must have the opportunity to read about the changes being proposed, ask questions about them, and provide feedback if you want to. IMI will consider every comment that employees make during the consultation. If you have concerns about the proposed changes, please submit them through the feedback form. We will consider your feedback and address your concerns.

IMI has the right to change the pension arrangements at any time, providing it consults with members in accordance with the law.

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Even with reduced costs, how do the individual members know this Trust option is as safe as the existing provider’s scheme?

29/07/2020

The Pensions Regulator is an independent body that regulates UK pension schemes. Master Trusts are very highly regulated because they hold large amounts of money and the Regulator wants to ensure that money is safe. How the MMT is regulated is outlined below.

The MMT has undergone a very rigorous, formal testing process run by The Pensions Regulator in order to become ‘authorised’. All new Master Trusts have to obtain authorisation before they can operate. This means the Regulator is satisfied that the MMT:

  • is governed properly, and that it has Trustees, strategists and funders that are "fit and proper"
  • has appropriate systems and processes in place, including administration and payment systems, risk management processes and member communications
  • has robust financials, taking into consideration its running costs, lending and borrowing, business plan, funding and strategy.

Once authorised, all Master Trusts including the MMT are subject to ongoing supervision from the Regulator. Each year, they must submit a “supervisory return” to prove they continue to comply with the Regulator’s standards.

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Please can you provide some more information on how Mercer compares to WTW (LifeSight) and other pension providers you benchmarked against, in terms of size and other criteria. Is a representation of 88,000 members and assets of £2.4bn high/low/better etc?

29/07/2020

The process for selection of a Master Trust provider was carried out by a selection panel comprised of RSP Trustees and representatives from IMI. They asked for and received tender documents from six master trusts. The questions focused on quantitative and qualitative areas. While scale was one of the measures that the selection panel considered, they also took into account many other factors as outlined in a previous question. The overarching aim was to come up with a solution that gave improved value to members of the RSP. The MMT was the unanimous choice of all members of the selection panel.

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What implications would it have on members that Mercer is US based rather than UK based?

29/07/2020

We do not believe that there are any significant implications from Mercer being a US-based company. Mercer has been operating in the UK for 50 years, and the Mercer Master Trust is independently run and managed by Mercer Limited, a UK based subsidiary of Mercer LLC. Therefore, whilst Mercer in the UK ultimately reports to Mercer in the US (which itself reports to Marsh and McLennan Companies), the UK business largely operates independently on a day-to-day basis. We also believe that there are benefits to members in Mercer being a global company, for example the significant purchasing power from Mercer’s global footprint, or the sharing of ideas across different countries. The Trustee Board of the Mercer Master Trust is made up of independent professional Trustees, with no links to Mercer.

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Will there be training/information provided for HR/payroll members to be able to advise our employees and manage processes effectively?

29/07/2020

Yes. If the change goes ahead, IMI will ensure that the teams involved in facilitating the move to the MMT will have the appropriate training.

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I have a sum in the deferred pension. How would this pot be affected by the forthcoming switch (if it goes ahead) to the Master Trust?

20/08/2020

Any benefits built up in the IMI 2014 Deferred Fund won’t be affected by the proposed switch to Master Trust.

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What is a Master Trust?

20/08/2020

See previous question: What is a Master Trust?

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What are the risks with moving to a Master Trust compared to keeping the current arrangement?

20/08/2020

See previous question: You've highlighted the benefits, but what are the risks?

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The Master Trust holds funds from many company funds. Would the IMI fund have any liability toward helping others if they had any financial difficulties?

20/08/2020

No. Each employer has their own section within the Master Trust. There is no shared liability.

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Could the level of contribution from the employer be affected under the Master Trust? For instance, if the trust says that IMI's currently was too high compared to other members, could it be reduced?

20/08/2020

No. IMI’s section in the Master Trust would be completely separate and decisions such as the level of contributions would continue to be a decision made by IMI for IMI employees.

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Will the Master Trust provide the flexibility to withdraw a cash-free amount prior to retirement and whilst continuing to make contributions?

20/08/2020

Yes, the Master Trust would provide you with the ability to be flexible. Once you are over age 55, this means you can take your tax-free cash and continue to work. You can continue to make contributions, up to a limit of £10,000 a year, once you have started to access your pension.

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Are there any immediate benefits if IMI switch to a Master Trust, such as immediate lower management charges?

20/08/2020

Immediate benefits would include:

  • More choice of investments
  • Lower investment charges
  • Improved options on retirement, including drawdown; and
  • Access to online tools, including Mercer Money.
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How is the Master Trust different to the RSP?

20/08/2020

See previous question: How does the MMT compare to the RSP?

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What happens if one or more companies within the Master Trust goes bankrupt?

20/08/2020

As each employer has their own section within the Master Trust, there would be no impact on the IMI section should other companies go bankrupt.

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What is the rationale of moving to a Master Trust?

20/08/2020

When investigating a potential move to a Master Trust, IMI’s rationale was to investigate the possibility of a better solution for members with lower running costs for IMI. Benefits of a Master Trust for members include:

  • More choice of investments
  • Lower investment charges
  • Improved options on retirement, including drawdown; and
  • Access to online tools, including Mercer Money.
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