Mercer launches DB master trust

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Consulting firm Mercer has said that it will launch the UK Mercer DB Master Trust, a sectionalised scheme for non-associated employers.

The Mercer DB Master Trust has evolved from the Federated Pension Plan, an existing master trust initially set up by Jardine Lloyd Thompson that currently has about £260m of assets and 73 participating employers.

Under its revised offering, Mercer will provide all services including investment with fiduciary management, journey planning, actuarial services, covenant assessment, scheme management and administration, with trusteeship provided by professional trustees from PAN Trustees, Independent Trustees Services and PTL.

Mercer's master trust joins a handful of other providers open to all industries including TPT, Citrus and Deloitte, and is announced ahead of a planned DB master trust framework by the Department for Work and Pensions. The DWP aims to increase awareness among employers of the option to consolidate DB schemes via master trusts through a cost comparison site among others.

In August, a spokesperson for the DWP told mallowstreet that the department “will provide a fuller update on the outcome of this work in due course”. 

Employers have so far been slow at showing enthusiasm for DB master trusts despite the potential cost savings; many seem to prefer fiduciary management or buy-ins and buyouts, if they can afford them. The Mercer offering now combines a DB master trust with fiduciary management.
Benoit Hudon, leader of Mercer’s wealth business in the UK, said: 
“The Mercer DB Master Trust offers clients a simple off-the-shelf solution that brings the best of Mercer’s scale and capabilities to help potentially reduce fees and improve outcomes. It uses the buying power of our fiduciary management platform, with around £250bn of global assets under management, passing these savings back to clients. It also gives members access to the largest administration of private sector pensions in the UK, which, combined with offerings like Mercer Money, provide a unique and unmatched experience to individuals.” 
Andrew Ward, UK head of risk transfer and journey planning, added: “With a clear journey plan agreed up front with the client, the Mercer DB Master Trust will take on the day-to-day operations of the scheme. This way, sponsoring companies can focus on strategic issues such as reducing the longer-term risks the scheme presents to the balance sheet and the ultimate settlement of the benefits.” 

Traditionally, the FPP focused on public sector outsourcing, and according to Mercer is one of only a limited number of master trusts with a passport from the Government Actuary’s Department declaring that it can provide broadly comparable pension benefits to the public sector.