Ring-fenced DB master trust launched for sub-£100m schemes

Not-for-profit provider The Pensions Trust has launched what it describes as the first one-stop ring-fenced DB master trust for the sub-£100m scheme market.

Called ‘DB Complete’, the service offers a fully bundled defined benefit package costing from 0.4 per cent for a £25m scheme, including trusteeship and governance, administration, investment strategy, fund management charges, actuarial, covenant and legal costs.

Premier launched its Premier DB Solution offering, which ring-fences scheme assets, with external trustees BesTrustees, Capital Cranfield and Capita Pension Trustees, in June.

The Pensions Trust is looking to extend its reach beyond its traditional market of servicing charity schemes by targeting the UK’s 6,000 small DB schemes. The provider says its services are particularly suited to the 3,000 schemes with assets of between £10m and £100m, many of which face numerous challenges with their legacy DB arrangement, such as costs, governance and increased regulatory scrutiny.

Charges for a £25m scheme opting for passive management for the growth part of its portfolio – through its Simplified Portfolio option – work out at 0.4 per cent, rising to 0.6 per cent for its Dynamic Portfolio which offers the benefit of active asset allocation, including access to absolute return, fund of hedge fund and emerging market debt assets as well as global equities. The Pension Trust says it is the only master trust offering of its type able to offer small schemes keen prices on these assets by leveraging its £6bn buying power.

All new employers will have their own separate section in The Pensions Trust, ring-fencing their assets and liabilities.

The Pensions Trust CEO Mike Ramsey says: “The costs and complexity of running a defined benefit scheme have increased significantly in recent years. This is largely due to changing legislation requirements. As such, the control of costs, and the assurance of a well-run scheme is of key concern for employers in dealing with what are increasingly legacy schemes. The launch of our new ‘DB Complete’ service has been designed to offer employers a solution for their legacy DB schemes, saving them time and cost, and removing legislative worries.

“Our combined size and strength at The Pensions Trust, enables us to achieve scales of economy more competitively than schemes can in isolation.”