Towers Watson has launched an independently governed DC master trust in the UK, which will be governed by an independent trustee board, chaired by Donald Brydon CBE.

The trust is aimed at sponsors looking for the independent governance and quality of a trust-based scheme with the cost-effectiveness of contract-based pension provision. It allows for larger-scale pooling of assets than traditional single-employer trusts, resulting in economies of scale and increased purchasing power that benefit both employers and members.

It is estimated by the company that UK DC assets will grow by around 11 per cent annually to triple in size within the next decade. It attributes this predicted growth to auto-enrolment legislation, new DC pension flexibilities, and the imminent increase to 8 per cent in the minimum contribution.

As a result, it says the UK master trust market will also grow significantly, accelerated by continued DB scheme closures and some members using the new flexible access rights to transfer to DC.

Towers Watson head of EMEA Paul Morris said the creation of the master trust came about after working in partnership with clients in the UK.

“While cost-effectiveness and governance are clear priorities, what they want is to provide a quality member experience with design and functionality that extends beyond today’s DC pensions needs and into tomorrow’s liberalised savings environment,” he said.

It will be led by Fiona Matthews, who has 25 years in the industry and is a qualified actuary and de-risking expert and was previously managing director of its UK risk solutions team.

Matthews commented master trusts will become an increasingly popular option for employers wanting a “high-value and flexible service,” especially as the pensions market consolidates.

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