Business Owners’ Guide to Master Trust Pensions
Table of Contents
With recent changes to pension legislation in Ireland, your retirement planning may need a serious review. If you’re a business owner or company director, these changes could affect not only how you save for retirement but also whether your current strategy still works at all.
For years, Executive Pensions (or single-member occupational pension schemes) were the go-to option for building retirement wealth in a tax-efficient way. But under new EU rules, these schemes are being phased out soon, and action is required to stay compliant and on track.
One of the most effective alternatives is the Master Trust Pension. It offers the structure, flexibility, and tax efficiency you’re used to, while meeting today’s governance and compliance requirements.
In this guide, we’ll explain what Master Trusts are, why they matter for your business, and how to decide if they’re right for you.
Why You Need to Act
The introduction of the IORP II directive into Irish law has made running a single-member pension scheme more complex. From April 2026, existing Executive Pensions will no longer be compliant unless they are:
- Wound up and replaced with a Master Trust, or
- Replaced with a PRSA (Personal Retirement Savings Account)
At the same time, it is no longer possible to set up a new Executive Pension or OMA (One Member Arrangement).
You may have heard that PRSAs are the natural replacement. However, in 2025, new limits were introduced that restrict the amount your company can contribute to a PRSA, based on your salary.
Before 2025, there was effectively no upper cap. This has created real difficulties for anyone hoping to make large contributions.
That’s why many business owners like you are now turning to Master Trust pensions as a future-proof solution.
What Is a Master Trust Pension?
A Master Trust is a type of occupational pension scheme where multiple unconnected employers participate in a single, centrally governed structure. Unlike setting up your own pension scheme, you don’t have to worry about trustees, audits, or compliance, it’s all handled for you.
You still get to enjoy the benefits of a company pension, but with less hassle and more efficiency.
How Does a Master Trust Pension Work?
Instead of each employer setting up and managing their own pension scheme (with trustees, audits, and compliance requirements), they join an existing “Master Trust” managed by a professional trustee company.
Here’s how it works:
- You (the employer) sign a participation agreement to join the Master Trust.
- Your company makes contributions to your pension — there are no fixed limits, as long as the funding is reasonable and within Revenue guidelines.
- The scheme is managed centrally by professional trustees who look after governance, risk management, and reporting — so you don’t have to.
- Your contributions are invested in a range of approved funds, often including a default strategy and optional fund choices.
- At retirement, you can access your benefits, including a tax-free lump sum based on your salary and service — a key advantage over PRSAs.
It’s a hands-off, fully compliant, and cost-efficient way for business owners and company directors to keep their retirement plans on track.
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Key Benefits of a Master Trust Pension
Full Compliance with IORP II: Meets the strict governance standards introduced by EU law, without requiring you to manage trustees, policies, or audits yourself.
No Need to Set Up Your Own Scheme: You join an existing structure, so there’s no burden of maintaining a stand-alone pension scheme.
Large Company Contributions Allowed: Your company can make significant pension contributions (no fixed annual limit), subject to Revenue rules like the Standard Fund Threshold (€2m).
Retirement Lump Sum Based on Salary and Service: Unlike PRSAs (which limit lump sums to 25% of the fund), Master Trusts allow tax-free lump sums based on your earnings and years of service.
Lower Costs Through Shared Services: Costs are reduced due to economies of scale — making it more efficient than running your own scheme.
Wide Range of Investment Options: While not fully self-directed, Master Trusts typically offer a good selection of funds and default strategies tailored to risk profiles.
Centralised Professional Governance: Trustees, administrators, and compliance officers are all built in, so you don’t need to appoint or manage them.
Simplified Administration: Everything from contributions to member communication is handled by the provider, making it easier for business owners to focus on running their business.
Future-Proof Structure: As regulations evolve, Master Trusts are designed to stay up-to-date, helping protect your pension from future compliance risks.
PRSA vs Master Trust: Which Is Better?
It depends on your goals, income, and how you plan to fund your pension.
Master Trusts:
- Allow large company contributions
- Offer tax-free lump sums at retirement based on salary and service that could be more than 25% of the fund
- Limited investment control
There are no fixed annual limits, but contributions must stay within Revenue rules (like the €2m Standard Fund Threshold) and be reasonable based on salary and service — ideal for business owners catching up on pension funding.
PRSAs:
- Can be self-directed
- No trustees required
- Employer contributions now capped at up to 100% of salary (from 2025)
- Lump sum limited to 25% of the fund
Is a Master Trust pension suitable if I’m the only employee or director?
Yes. Even if you’re the only member, many providers now offer Retail Master Trusts tailored for business owners and sole directors. These give you the benefits of compliance and flexibility without the cost of running your own scheme.
Will I still get tax relief on contributions to a Master Trust?
Yes. Company contributions to a Master Trust are treated as a business expense and fully tax-deductible — subject to Revenue rules around salary, service, and the lifetime fund limit (Standard Fund Threshold, currently €2 million).
Learn more about pensions and retirement planning by reading our Retirement Planning Guide.
Is a Master Trust pension portable if I leave my company or sell my business?
Yes. If you retire, exit your company, or sell the business, your pension benefits stay intact. You may have the option to transfer your benefits to another approved scheme or keep them in the Master Trust until retirement age.
How do I transfer my current Executive Pension to a Master Trust?
You’ll need to:
- Wind up your existing scheme
- Choose a Master Trust provider
- Sign a participation agreement
- Transfer your existing pension funds
Our financial advisors can guide you through this process and help ensure the transfer is smooth and tax-efficient.
Get a Retirement and Pension Planning Quote
Get a Pension and Retirement Planning Quote
With Executive Pensions being phased out, it’s important to act now to ensure your retirement strategy stays secure — and to avoid penalties or disruptions to your long-term plans.
Master Trust pensions have become the most flexible and robust solution for business owners and company directors navigating these changes.
If you’re unsure about your next step, we’re here to help with clear, personalised advice. At True Wealth, our expert advisors will guide you through your options so you can make informed decisions and protect your financial future with confidence.
We are experts in personal and business protection, savings and investments, pension tracing, retirement planning & pensions, business owner and personal financial planning, mortgages, and wealth management and extraction.
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