WTW will buy master trust provider Cushon from NatWest Group, subject to regulatory approval. The acquisition is expected to close in the first half of next year. The purchase price has not been disclosed.

The acquisition of the master trust will bolster WTW’s defined contribution offering. Cushon has about £4bn in assets under management and 730,000 members.

WTW already runs the £26bn LifeSight master trust, which has won clients including Vodafone, Veolia, Ricardo and Emerson. In contrast with Cushon, LifeSight has just 430,000 members despite its large asset size.

"Adding Cushon to our portfolio will enable us to serve all segments of the rapidly growing master trust space, with LifeSight continuing to focus on large companies and Cushon enabling growth in the mid-market,” said Julie Gebauer, WTW president of health, wealth & career.

Cushon’s technology-led solution is “highly scalable”, she noted, saying WTW is “excited by the capabilities they bring us for further innovation in workplace pensions and savings”.

Cushon’s founder and chief executive Ben Pollard said: “We are thrilled to be joining WTW and excited for the next chapter in our journey.”

WTW said the purchase agreement includes a referral arrangement so that NatWest’s commercial banking customers can continue to access Cushon’s workplace pensions and savings services for their employees.

Pollard added: “Our proposition has created strong demand among NatWest’s corporate clients, which we will continue to serve through our ongoing partnership agreement with NatWest. We look forward to continuing to work closely with them into the future.

Paul Thwaite, group chief executive of NatWest Group, said the transaction is aligned with the bank’s strategic priorities of disciplined growth, simplifying the firm and actively managing its balance sheet.

“Given the broader changes within the pensions market, and the increasing importance of scale, both NatWest Group and Cushon believe the next phase of the firm’s journey will be most effectively achieved under the ownership of a larger, more established player in this space,” he said.

The deal comes ahead of new legal requirements, included in the pension schemes bill, that DC providers’ default option must reach £25bn by 2030, or £10bn with a credible plan that they will have £25bn AuM by 2035. It is expected that this deadline will accelerate DC consolidation, which was already underway before the introduction of the bill.

There had been speculation in the autumn that NatWest was looking for a buyer for the pensions firm in which it had taken an 85% stake for £144m in 2023.

For the acquisition, WTW took financial advice from Ardea Partners and legal input from DLA Piper, while PwC and Alpha FMC served as due diligence advisers. NatWest had Lazard as financial adviser, also using lawyers at CMS and due diligence experts at KPMG. The Cushon management team relied on financial advisers Lincoln International and law firm Travers Smith.