UPDATED FOR 2026
By David Pye, Head of Client Development
Summary
David Pye explores how employers and trustees can choose between a DC trust, master trust pension or contract-based scheme, and why governance, regulation and member outcomes should guide the decision.
What is a DC pension and what structure options do employers have?
A DC pension (Defined Contribution pension) is one of the most common ways for employers to provide retirement savings for their workforce. Contributions are paid into an individual pension pot, which is then invested until retirement.
But once an organisation has decided to offer a DC pension, the next question is how that pension should be structured.
Employers and trustees typically choose between three options:
- A trust-based DC pension scheme
- A master trust pension
- A contract-based pension scheme
Understanding the differences between these options is important when deciding what is best for both your organisation and your members.
Talk to our EBC team about how we can help.
Choosing the right DC pension structure starts with member outcomes
When considering trust based vs contract based pension schemes, the starting point should always be good member outcomes. However, many trustees are not pension professionals and employers rarely are. This raises an important question:
Do trustees and employers have the experience, technical expertise and time to run a trust-based scheme effectively while also assessing whether another structure might be better?
These governance considerations are one of the main reasons many organisations begin to explore alternatives such as a master trust pension scheme.
What is a master trust pension scheme?
A master trust pension is a multi-employer trust-based arrangement where many employers participate in a single scheme. Instead of each company running its own pension trust, the scheme is managed centrally by professional independent trustees and administrators.
For many employers, this can reduce governance responsibilities while still providing a trust-based structure. However, choosing a master trust is not always straightforward.
Master trusts are now subject to a formal authorisation regime overseen by The Pensions Regulator, which requires schemes to demonstrate strong governance, financial sustainability and robust systems before they can operate. This illustrates how quickly the market and regulatory environment for DC pensions can evolve, and why employers and trustees need to carefully assess which structure is right for their organisation and their members.
Read more: How inclusive design can improve workplace pension engagement
DC trust vs contract based pension schemes: what are the alternatives?
While many organisations see a master trust pension as an attractive option, it is not the only route available.
Employers and trustees may also consider:
- Maintaining their existing trust-based DC pension scheme
- Moving to a contract-based pension scheme
Understanding what a contract based pension scheme is can help clarify the differences.
In a contract-based arrangement, each employee has an individual contract with the pension provider rather than being part of a trust overseen by trustees. Each model has its own governance structure, responsibilities and costs.
Read more: Why language matters when talking about pensions – and how to make it work for you
How do employers and trustees decide which pension structure is best?
The difficulty many employers face is separating objective advice from commercial bias. Different providers naturally promote the solution that aligns with their own offering.
For example:
- Providers without a master trust pension scheme may suggest it is not the best route.
- Advisers linked to a master trust may recommend moving to one – theirs.
- Third-party administrators who run trust-based schemes may suggest keeping the existing structure despite increasing governance requirements.
For employers and trustees, this can make it difficult to determine which option is genuinely best for the organisation and its members.
Read more: Think salary sacrifice is just for pensions? Think again
Why independent pensions advice matters
Choosing between a DC pension trust, master trust pension or contract-based pension scheme should be based on what delivers the best outcomes for members and the organisation.
At Broadstone, we provide independent advice to help employers and trustees assess their options.
- We do not operate our own master trust.
- We are not tied to any pension provider.
- We can support third-party administration if required during a scheme transition.
This allows us to guide employers and trustees through their options while helping ensure members understand what is happening and why.
Discuss your options with an expert
If you would like to have a no-obligation discussion about your workplace pension options, please contact a member of the Broadstone team. We can help you assess whether a DC pension trust, master trust pension scheme or contract-based arrangement is the right solution for your organisation and your members.
