Mercer is launching a master trust service through its workplace savings platform, with BESTrustees appointed as independent trustee.
Describing the launch as an industry first, the consultancy says the master trust will differ to those currently available in the market and tackle head on the challenges raised by the Office of Fair Trading’s paper on DC pensions.
Mercer says the fact it can switch between any of the three providers on its panel – Zurich, Aegon and Friends Life, means its oversight team have the power to make meaningful changes if standards drop.
Mercer points to the OFT finding that employers, who have the responsibility for deciding which pension scheme to choose for their employees, frequently lack the capability or the incentive to assess value for money, or find the choices on offer complicated, so rarely switch provider.
Mercer UK DC leader Brian Henderson says: “Our Master Trust directly addresses these points. Through our Mercer Workplace Savings (MWS) service, clients will be able to enroll employees in selected provider schemes over which Mercer exercises consistent, professional oversight. Clients really get it: they understand the value that Mercer brings in monitoring provider operations, products and investments with the objective of delivering better outcomes to employees and companies. “Consistent oversight of the providers means that Mercer can, and will, take action should they fail to meet high standards. In short, it’s a master trust that has governance with real bite.”
BESTrustees Chairman Alan Pickering says: “When it comes to workplace pensions saving, DC must not mean ‘Don’t Care’.
“The governance which we will supply will be robust and not simply a fig leaf. Hopefully, those employers and employees who adopt this scheme will benefit from our attention to detail so that the routes they choose can potentially lead to improved member outcomes. Employers and employees may have to make more decisions within DC than they were used to within the defined benefit environment. However, the good governance which we will provide should enable decisions that are focused and make a real difference.”