Xafinity is launching a new low-cost pension scheme, called XPT, that has been designed as a cost effective solution for building future DC benefits, combining the governance attractions of a trust-based pension solution, with the low-costs normally associated with contract-based defined contribution schemes.
Xafinity’s move has sparked a number of life insurers to confirm they are also looking at trust-based offerings, which could prove attractive because they may be able to sidestep the Retail Distribution Review and allow refunds of contributions to early leavers.
XPT is a multi-employer trust-based arrangement, with one set of trustees and administrators overseeing all participating employers’ pension benefits. Each employer’s slice of the XPT master trust is ring-fenced, allowing them to offer their own ‘employer pension trust’, which can be branded as such. Xafinity says this ‘master trust’ scheme enables administration and governance costs to be spread widely, minimising charges and freeing more funds for investment.
The annual management charge deducted from members’ funds covers all ongoing administration, communication, levy, governance and investment costs, unless an employer wishes to meet some of these costs directly. Xafinity says a typical AMC will be 0.8 per cent of each member’s fund.
XPT provides investment support to members to help them select which strategy is appropriate for them personally. As well as a range of self-select funds, XPT is also offering four diversified lifestyle type portfolios. These aim to enable members to achieve their desired investment returns while reducing volatility.