Master Trusts
Master trusts are a ready-made superannuation solution which offer distinct advantages to employers including ease of implementation, access to economies of scale and simplicity of operation.
The key difference between master trusts and separately-registered superannuation schemes is trusteeship. With master trusts, trusteeship is outsourced as opposed to being undertaken by the organisation itself or by employees who are elected or appointed to a board. This means that the duties and responsibilities inherent within the trustee role are handed over to the provider of the master trust product or to its nominee.
These include the responsibility to set investment strategy, to appoint and to monitor investment managers and scheme administrators, to appoint advisers, to hold meetings, to report to members, to issue an investment statement and to generally conduct the affairs of the scheme in a professional way.
The Rationale for a Master Trust Arrangement
Organisations today are increasingly focusing their resources on activities which create value in their own areas of expertise, and are shedding activities in which they have no relative advantage. The need to develop expertise in superannuation, to keep abreast of superannuation and trustee law, and to maintain sufficient knowledge of modern portfolio theory are not competencies which most managers and employees require in their day to day roles.
Consequently many organisations are looking to source these skills externally rather than divert the time of their own staff into acquiring the necessary levels of proficiency. The advent of master trusts means that organisations are now able to do this.
The preference of organisations for a master trust arrangement can arise for a number of reasons. These include:
- A lack of time, resources or expertise available to operate a separately-registered scheme, or an aversion to the compliance costs and requirementts which such schemes impose;
- A restructuring of the organisation which has reduced the number of scheme members, so that it is no longer economic to have a separately-registered scheme;
- A change in the culture of the organisation, such that management no longer feels that it is necessary to have full control over its own superannuation arrangement;
- A desire to provide higher-earning staff with a retirement savings vehicle which avoids the liability of paying tax at 39 cents in the dollar on those retirement savings;
- A view by management that the organisation should use its buying power to deliver benefits to employees which exceed the financial cost of those benefits.
Our Method
Under a master trust arrangement there is a greater dependence on the services of a single provider than is the case with a separately-registered superannuation scheme. For this reason the selection process and the contract entered into with the selected provider become all the more important.
National Benefits has the knowledge, expertise and industry standing to design and to put into place an effective master trust arrangement for your organisation. A well-conceived and correctly-conducted design and tender process invariably results in a master trust arrangement which meets management's and members' expectations.
Whether the master trust is a new arrangement or is being established as a result of scheme restructuring, the service commences with a comprehensive review of your existing arrangements and circumstances, and the preparation of a detailed design specification. This is often preceded by a staff survey in order to gauge employees' preference for superannuation benefits and to obtain their input on specific design features. A market tender is then undertaken in order to ensure that the most favourable terms are obtained from the market.
The consulting service ensures the establishment of a master trust which represents the most modern and flexible superannuation arrangement available today. It also ensures that the most competitive provider is selected to deliver the service required, both in terms of cost and performance.
Further Information
If you feel that your organisation could benefit from a transfer to a master trust arrangement, or if you are considering the establishment of a new master trust, please contact us.