News / 12.09.19

Will moving my scheme to a DB master trust mean I can never leave? What about exit penalties?

A master trust can be used as a stepping stone to your longer-term goals. Most schemes, especially those with closed sections, will (ultimately) want to target an insurance solution in future, allowing them to pass on all future costs and risks to an insurance company.

Citrus aims to achieve this objective around the time when we expect there to be only pensioner members remaining in a section – this is the point at which insurance solutions tend to be most affordable.

The multi-employer nature of Citrus means it is likely that we will be able to take a number of sections to the insurance market together as part of a package, making the transaction more attractive to insurers. This is likely to lead to a better price. It also means these sections will then be looking to wind up over similar time-frames, with the prospect of reduced wind-up costs through the sharing of fixed costs.

The wind-up process takes around 6-12 months and we would provide a detailed project plan throughout.

There may be other reasons for wanting to exit Citrus. The Trustee doesn’t create barriers to leaving and is happy to engage in any proposals to leave. Exiting would initiate a similar process to joining; the approach is usually to make a bulk transfer out, provided that the Trustee is comfortable with the key areas of the proposal, and primarily that members' interests are protected.  There is no last man standing arrangement in the majority of circumstances.

Find out more about long-term objectives, such as buy-out, in our blog post.

For further information please get in touch.