Consolidation of trust-based occupational pensions

If you run a single-employer trust-based occupational pension there’s currently much to consider…

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Tighter regulations mean more time and cost

The government and The Pensions Regulator’s drive to increase the quality of workplace pensions towards better member outcomes has meant tighter regulations and more scrutiny for trust-based occupational pension schemes.

Our key considerations guide covers the impact that these changes in regulations have had over the last few years, including:

  • the removal of short service refunds
  • the annual management charge cap for ‘qualifying schemes’
  • an increasing emphasis on good governance
  • requirements for further transparency in annual statements
  • pressures to offer members better investment choices.

For employers with their own ‘in-house’ scheme, this means more time, cost and resources to meet these changing regulations and to support trustees. As a result, employers may need to consider reviewing the relationship between scale, cost, governance, sustainability. And ultimately their ability to continue operating in the pensions market.

Our top tips for successful trust-based pension consolidation

1. Make sure everyone’s on the same page

Consolidation often involves multiple stakeholders, namely scheme sponsors, advisers, employers, third-party administrators, lawyers and trustees. So, it’s important to make sure everyone is clear on what’s happening, when and why.

2. Have a realistic timeline with a project plan

The consolidation process can take time, so it’s wise to plan ahead. Have regular meetings with stakeholders and manage expectations. Have one person who oversees the process from start to finish and stick to an agreed timeline.

3. Discuss and agree criteria and priorities

What makes a good trust-based occupational pension scheme? Discuss and agree the specific criteria so any new solution meets everyone’s expectations.

4. Check the provider’s standards of governance

Take a look at The Pensions Regulator’s 21st Century Trusteeship campaign. This outlines their expectations around effective scheme management and how well-governed pension schemes should look.

5. Review your scheme rules

Do the trustees have rights to make transfers on behalf of members or is member consent required? Is there a set process and timescale required for member engagement and communication?

6. Think about the potential costs

Costs to consider can include, legal and professional advice, data cleansing (especially for deferred members), communications and asset disinvestment charges.

Managing the transfer process through careful planning can help keep costs down. Check with any prospective new provider to see what implementation support is offered and if this involves cost.

Useful resources

Why consolidate with The People’s Pension?

The People’s Pension is a flexible, portable workplace pension designed for people, not profit. We’ve also been granted master trust authorisation. This means we’re recognised and approved by The Pensions Regulator as a master trust that’s properly run and completely focused on the needs of our 5.3 million members.

  1. We’re not-for-profit – the money we make is put back into services that helps our customers.
  2. We make it easy – for everyone we do business with. From our straightforward sign-up process, to clear and engaging communications and an award-winning UK contact centre.
  3. Employers like us – 91% of people we do business with are positive about the experience they have.

For more about who we are and what we do, take a look at our corporate brochure.

Read what our head of business development, Dave Lunt, has said about DC pension consolidation in Corporate Adviser, April 2020.

Next steps

Thinking about consolidating? Contact us to discuss if The People’s Pension can meet your needs and for more on the support we can offer to your project…

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