What lies ahead for DB pensions and master trusts in 2021?
We'd like to share with you our thoughts for the year ahead, and how we see interest in consolidation of DB schemes growing:
- We expect that 2021 will help put DB master trusts more clearly in the spotlight – helping to see the better outcomes they may provide to sponsors and members, especially of smaller DB schemes. The ongoing work with the DWP to introduce a certification scheme will assist employers and trustees in comparing the DB master trust options available, and the benefits they bring compared to other forms of consolidation. This should help open up the market, encouraging transparency and clarity, and aiding decision-making.
- Businesses suffering from the impact of COVID-19 are likely to have focused on taking action in 2020 which provided the most immediate and necessary support to their future viability. At the time of writing, significant issues persist for many. While DB schemes may have been seen as a longer-term challenge by many, and put aside during recent times, we foresee increasing exploration of consolidation in 2021 as businesses seek to capitalise on the longer-term value and better outcomes offered.
- The Pensions Regulator’s second DB funding code consultation should be published in the second half of 2021. With clearer requirements and tighter regulations, we expect this to further encourage the move by smaller standalone schemes to consolidate, so that they can benefit from ongoing strategic and governance advantages as part of a larger DB master trust, in the key areas of funding and investment.
- We will continue our work to help the sponsors of our member sections as they navigate emerging and planned issues. These projects are attuned to each sponsor’s specific needs and challenges, helping them meet their long-term commercial and benefits objectives, and fulfilling the obligations to their members.
If you have any questions or would like to discuss Citrus in more detail please get in touch.