DB pension trustees confident in value for money despite economies of scale concerns

Around 91 per cent of defined benefit (DB) pension scheme trustees think that smaller scale can result in cost disadvantages, research from Stoneport has revealed.

Despite this, 90 per cent of those surveyed stated that they were confident that the way they operate their scheme currently offers value for money,

The survey found that 61 per cent of schemes with over 1,000 members were ‘very confident’ that they offered value for money, although this fell to 32 per cent amongst schemes with 500 members or less.

It also found that 15 per cent of trustees had not recently benchmarked the value for money offered by their scheme, with just 8 per cent benchmarking their value for money against master trust arrangements or other forms of consolidation.

Issues around scale had also fed through into investment strategies, with 77 per cent of trustees stating that small schemes are significantly or somewhat disadvantaged on investment opportunities due to scale, whilst 69 per cent said there were also disadvantages in compliance.

Almost a quarter (22 per cent) of trustees stated that they were likely to consider a master trust arrangement or pooled structure arrangement, although barriers remained, with 34 per cent of respondents highlighting employer support as the most important issue to overcome, whilst 15 per cent cited adviser support.

Stoneport managing director, Richard Jones, stated: “The Pensions Regulator has said that achieving economies of scale and value for money is a key goal for trustees and those who can’t demonstrate this should consider consolidation. Trustees have to seriously weigh up the pros and cons of consolidation.

“They need to decide whether to continuing to operate as a smaller scheme, with the challenges this might entail or whether they need to consider their end goals again and include different consolidation options, such as master trusts and pooled structures.”

    Share Story:

Recent Stories

Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth.

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video interviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today. Please click here for an edited write-up of the video

Multi asset credit
Pensions Age editor, Laura Blows, discusses multi asset credit with Royal London Asset Management senior fund manager, Khuram Sharih
Pensions Age podcast: buy-outs and buy-ins for member and employer nominated trustees
Pitfalls and good practice when approaching insurers with Pensions Age editor, Laura Blows, Martin Parker (Just Group) and Akash Rooprai (ITS)