Floodgates open for DC scheme shift to master trusts as asset commitments top £4bn during lockdown
There will be a “surge” of employers moving defined contribution (DC) occupational trust pension schemes to master trusts as lockdown eases and employees return to work post-furlough, Hymans Robertson says.
The consultant said it had seen enquiries about making the move to master trust double over the last few months - adding it expected these enquiries to translate into action as firms look at ways to reduce costs and retain staff as well as reduce regulatory burdens.
It added its analysis showed master trust membership increased by at least a third during the last three months and asset shift commitment to the master trust market rose by over £4bn.
Hymans Robertson head of DC provider relations Michael Ambery said: "We believe this is just the opening of the floodgates. Having seen enquiries about master trusts double over the last few months we are fully expecting a surge of movement into them when the restrictions are finally lifted.
"Businesses will be making decisions to help their continued success and survival and it would be a sensible move for employers to consider. Moving to a master trust can help bring down costs as we head towards economic difficulties from the fallout of the pandemic. This surge could well last through to the end of 2021."
Ambery added: "We've already seen some high-profile employers issue new terms and conditions to staff, which gives the flexibility to change the pension contribution structure. This could be something that other firms look at too. The use of a smaller occupational trust to support members is not as good as the master trust framework and the value of the proposition including infrastructure and regulatory oversight may well be seen as more attractive.
"Providers have been seeing an increase in enquiries as employers look at ways to reduce both the regulatory burden as well as lowering costs as they brace themselves for the anticipated economic downturn."
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