A “big surge” in defined contribution (DC) occupational trust pension schemes moving to master trusts is expected as the UK begins to ease lockdown, Hymans Robertson has said.

The firm reported that enquires into making the move to a master trust had doubled in the “last few months”, adding that it expects these enquiries to “translate into action” as companies look to reduce cost and retain staff, as well as reduce regulatory burden.

Analysis of the lockdown period already showed a “good flow” of schemes moving to master trusts, with master trust membership increasing by at least a third during the last three months, whilst asset shift commitment to the master trust market rose also by over £4bn.

However, the firm warned that this could be “just the opening of the floodgates”, predicting a “surge of movement” into master trusts once restrictions are finally lifted, which could last until the end of 2021.

Hymans Robertson head of DC provider relations, Michael Ambery, explained: "Businesses will be making decisions to help their continued success and survival and it would be a sensible move for employers to consider.

“Moving to a master trust can help bring down costs as we head towards economic difficulties from the fallout of the pandemic. This surge could well last through to the end of 2021.

“We’ve already seen some high-profile employers issue new terms and conditions to staff, which gives the flexibility to change the pension contribution structure. This could be something that other firms look at too."

He added: “The use of a smaller occupational trust to support members is not as good as the master trust framework and the value of the proposition including infrastructure and regulatory oversight may well be seen as more attractive.

“Providers have been seeing an increase in enquiries as employers look at ways to reduce both the regulatory burden as well as lowering costs as they brace themselves for the anticipated economic downturn.”

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