Pension schemes could make cost savings of up to 20 per cent by switching to a master trust, according to new actuarial research.
Analysis by Hymans Robertson showed that savings could be made as many master trusts seek to build up new business, following authorisation via The Pensions Regulator.
Hymans Robertson urged companies considering a move to a Master Trust to act now if they want to take advantage of attractive pricing as providers look to fulfil targets for new business.
This authorisation process, which began last year, has now concluded with 37 authorised schemes.
Hymans Robertson head of DC provider relations, Michael Ambery says: “As Master Trust authorisation completes, it is a significant milestone on the vehicle’s path to maturity.
“With TPR’s stamp of approval, we’ve seen that providers are significantly lowering their prices as they work to reach the business targets they have set themselves. Any DC scheme which has previously recognised the merits of a move to a Master Trust should seriously consider whether now is the right time for a move.”
He adds: “The benefits for a pension schemes of moving to a Master Trust are genuine. Savings in terms of governance efficiencies and member administration bring real efficiencies to a company’s pension function, without sacrificing member security.
“But, while gaining these advantages, corporate sponsors need to ensure this competitive pricing also delivers the value and service they require for employees. They must also recognise the quality offered by a Master Trust provider in comparison to the value and quality of any current arrangement and make the right decision for their own scheme.”