Quarter of schemes switch to DC master trusts; a further half planning similar move

Jonathan Stapleton
clock • 1 min read
Ball: Projects are becoming increasingly more sophisticated
Image:

Ball: Projects are becoming increasingly more sophisticated

Transfers to defined contribution (DC) master trusts will continue well into 2021, latest research from Sackers reveals.

The law firm's poll of 66 employers and trustees showed that 25% of respondents had already moved to a DC master trust, with 50% planning to either do so in the future, or at least signpost a DC master trust as a retirement option for their members.

Sackers partner and head of DC Helen Ball said: "These results do not come as a surprise. Originally, the move to a DC master trust was thought of as a wholesale move; transferring all of the members from one DC vehicle to another. However, recent experience, and our survey, have clearly shown that projects are becoming increasingly more sophisticated. A large range of different projects are now being considered, including transferring deferred members only or DC sections of hybrid schemes to a DC master trust.

"We expect this trend to continue for some time. Even where employers are not looking to transfer their members to a master trust right now, they are becoming more interested in the role that master trusts could play in providing support to employees at retirement. When coupled with appropriate guidance, this can be a useful way of providing employees with access to drawdown arrangements without having to add more complexity into the employer's own pension scheme."

Ball concluded: "DC master trusts are now firmly embedded in the fabric of the industry and will continue to be an intrinsic component in the delivery of benefits for the majority of employers and trustees in the future. Our advice to any considering such a move is simple: involve all parties early on in the discussion and work together as a team to create an efficient and well managed project."

More on Investment

Industry Voice: 5-year Expected Returns

Industry Voice: 5-year Expected Returns

'The Roasting Twenties - Things Are Heating Up'

Robeco
clock 27 October 2021 • 4 min read
Schroders group CEO Peter Harrison

Schroders boosts FM offering with R&M Solutions takeover

Acquisition expected to clear in the first quarter of next year

James Phillips
clock 26 October 2021 • 3 min read
Industry Voice: Engagement - A tool to drive change and limit risk

Industry Voice: Engagement - A tool to drive change and limit risk

RLAM
clock 26 October 2021 • 2 min read