A consolidation of assets into large schemes has led to more than half (£160bn) of occupational trust-based assets being overseen by fewer than 50 people, according to research by consultancy Lane Clark & Peacock.
The report – “Pension Powerbrokers 2: The DC generation” is based on interviews with 15 senior figures from a range of different types of scheme, and supported by LCP’s own analysis.
The £160bn is managed by the trustees of the seven largest master trusts, and LCP has predicted this group’s share will be even larger following the takeover of Aegon by Standard Life.
According to LCP, across most of these master trusts, only around half a dozen people are charged with overseeing the activities of a massive and rapidly growing scheme, which can have many thousands of individual employers and millions of individual members.
Steve Webb, former pensions minister and a consultant at LCP, says: “To help these ‘masters of the universe’ to do a good job we think they need a lot of resource to hold schemes to account across a wide range of issues from investment strategy including private markets, value for money, post-retirement design and so much more.
“These schemes need lots of independent challenge and fresh insight to avoid ‘group think’ between these schemes, especially in a world of scheme ‘league tables’, which is what the new Value For Money framework will deliver.”
LCP reporting has also claimed that while fewer than 500 DB trustees control more than half of all defined benefit assets, the concentration of power in DC is 10 times greater.
The Department for Work and Pensions has also recently undertaken a consultation on the future of trusteeship, though the LCP report claimed more could be done to increase governance standards in light of the level of consolidation within the DC space.
The consultation has now closed and its industry contributions are currently being assessed by the government.
The report also identified issues such as that large employers can demand and secure a bespoke offering more suitable to their particular workforce from master trusts but most other employers are largely left to take the standard offering.
There are now 11m extra workplace pension savers compared with the 2012 when automatic enrolment started, overwhelmingly in DC schemes.
