Category: Group risk regulation · Reviewed by Simon Temme, Account Executive · Last reviewed 2026-06-10
The master trust threshold refers to the five statutory criteria a multi-employer DC master trust pension scheme must satisfy in order to obtain and retain authorisation from The Pensions Regulator under section 8 of the Pension Schemes Act 2017. The criteria are: (i) all persons involved in the scheme are fit and proper; (ii) the scheme is financially sustainable; (iii) the scheme funder meets requirements; (iv) the systems and processes are sufficient; and (v) the scheme has an adequate continuity strategy.
Category: Group risk regulation Also known as: Master trust authorisation threshold Statutory basis: Pension Schemes Act 2017, ss.5–10 Related concepts: Master trust pension, The Pensions Regulator, Pension Schemes Act 2017 (linked context)
The authorisation regime was a direct response to the rapid growth of DC master trusts following auto-enrolment in 2012, where the absence of an authorisation requirement allowed market entrants of varying quality and several failures. The regime applies to schemes which (i) are an occupational pension scheme, (ii) provide money purchase (DC) benefits and (iii) are used by two or more employers that are not in the same corporate group.
Pension Schemes Act 2017 sections 5–10 (key concepts and authorisation), 11–17 (financial sustainability and scheme funder), 18–24 (systems and processes, continuity strategy), and 25–35 (ongoing supervision and triggering events). The Master Trusts (Authorisation Application) Regulations 2018 (SI 2018/1030) provide the procedural detail. TPR has authorised approximately 35 schemes; several existing schemes withdrew during the 2018–2019 authorisation window because they could not meet the threshold.
Authorisation is required before a scheme can operate as a master trust. Ongoing supervision applies — schemes must notify TPR of triggering events that could affect their continued ability to satisfy the threshold. TPR may withdraw authorisation if the threshold ceases to be met, triggering the continuity strategy under which member assets are transferred to another authorised scheme.
A master trust applicant submits an authorisation application to TPR providing evidence on each of the five criteria, including the corporate structure, financial sustainability projections, evidence of fitness and propriety of trustees and key personnel, descriptions of systems and processes, and the continuity strategy. TPR assesses the application over a 6-month period; if satisfied, grants authorisation; if not, refuses and the scheme cannot operate.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
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