5 reasons your pension scheme would be better off in a DB master trust - governance
Increasing running costs and stricter expectations from the Pensions Regulator are just some of the challenges facing employers and trustees of DB pension schemes. Many schemes would be better off in a DB master trust to overcome these challenges. From accessing better investment returns, to cost sharing benefits and economies of scale, we explore the 5 key reasons why you should consider transferring your scheme into a master trust like Citrus.
Reason # 3 – Improve governance standards and meet TPR’s expectations
Running a pension scheme takes a lot of time and commitment from your Trustee board to make the best decisions and help your scheme meet its long-term objective (LTO). With increasing complexities in the system, and much higher expectations from The Pensions Regulator, fulfilling the role of a trustee is tougher now than ever before.
Trustee knowledge & understanding
By taking on your trustee responsibilities, master trusts not only reduce the burden of running your pension scheme, you can rest assured it is being governed to the highest of standards.
Having an experienced Trustee board, supported by a team of experienced advisers, means the Citrus Trustees have a wide breadth of knowledge and experience of scheme issues, and are kept up-to-date on the latest industry and regulatory developments. Having a professional Trustee on the board also brings an independent perspective and they can incorporate best practice methods for trusteeship and governance of the scheme.
You can leave all the decision-making to the master trust board, or otherwise it is possible to nominate a Trustee for your own section.
Meeting TPR’s toughening expectations
TPR’s recent consultation on the future of trusteeship and governance focused on two key themes - trustee knowledge and understanding, as well as scheme governance and effective decision-making. The consultation aims to raise standards for small and medium schemes not currently being run effectively, ultimately ensuring all pension schemes deliver good value for their members. If the scheme is not being run to a good standard, it recommends consolidation into a larger scheme which has higher governance standards.
In addition to this, a consultation on the new Code of Practice on scheme funding launches in March 2020. The new code will implement stricter measures to ‘optimise’ scheme funding, along with stronger powers for The Pensions Regulator. Those who do not comply are at risk of regulatory intervention, which can be an expensive and time-consuming process.
Both consultations steer towards a much tougher regulatory environment. All schemes, particularly smaller inefficiently run schemes, will need to up their game. The growing requirements mean additional time and effort from employers and trustees to ensure they’re met.
Moving into a master trust like Citrus reduces the additional work required from the employer. By taking on trustee responsibilities and running your scheme to the highest standard, employers have more time to focus on running their business and can rest assured their scheme is in safe hands.
Improving governance standards and fulfilling TPR expectations is just one of the reasons your scheme may be better off in a DB master trust. Watch out for the next blog in our 5-part series where we show you how you can save over 30% on your scheme running costs.
If you would like to find out more information in the meantime, please contact Lindsay Davies.