News / 13.12.18

Save up to £700,000 in costs through aggregated buy out in a DB master trust

Our research has shown that smaller Defined Benefit (DB) schemes that group together could save up to £700,000 when targeting full buy-out.

Citrus analysed how much, on average, schemes would expect to save from aggregated buy out.

  • Schemes with assets under £10 million could expect to save around £400,000
  • Schemes with assets under £50 million, this saving could jump to around £700,000
  • These notable savings can be attributed to:
    o 50% reduction in adviser costs
    o 30% reduction in wind-up costs
    o 3-5% reduction in insurance premiums.

In many cases it can help schemes reach buy-out sooner and in some cases, were it not for joining together, smaller schemes might not be able to secure buy-out terms at all.

A grouped, streamlined approach

A closely managed, streamlined, aggregated approach is attractive to insurers. Schemes adopting this approach can take advantage of more attractive insurer pricing and savings on administration and wind-up costs. Previously lengthy and costly implementation processes can be significantly improved by consolidating the transactions and pre-negotiating contracts.

Employers are having to navigate the ever-increasing complexities associated with running DB schemes. As they face ongoing cost and time pressures many are now looking at consolidation in an attempt to ease these and other burdens.

Across the range of consolidation vehicles available, different options will be appropriate for different schemes. For those employers who are finding it a challenge to meet the demands of running both their business and their DB pension scheme, a master trust could now be the best option - enabling them to gain from a range of efficiencies while bringing the goal of full buy-out within reaching distance.

For more information on DB master trusts and how Citrus could help your scheme, please contact us.