Healthcare cash plan provider Medicash has transferred its £20m DB scheme to TPT Retirement Solutions Master Trust as smaller DB schemes are increasingly consolidating their assets.
By transferring the assets of its 174 members into the £9bn TPT master trust, Medicash aims to gain access to a broader range of investment assets, reduce running costs and improve the security of members benefits.
The healthcare cash plan provider follows the initiative of other smaller schemes with assets of less than £1bn who have recently chosen to transfer their assets into a larger DB Master Trust.
The drive to consolidate has picked up the pace since last years’ publication of the Department for Work and Pensions Whitepaper on DB Pension Schemes, which highlighted the persistent fragmentation of DB schemes.
Sue Weir, CEO of Medicash predicts that “other DB schemes may follow Medicash and undergo this type of consolidation”
“The benefits of a DB Master Trust can be attractive for schemes with less than £1bn under management” Weir argues.
According to the Pension Protection Fund’s (PPFs) 2018 Purple Book, there are some 1934 schemes in the UK with fewer than 100 members. Yet PPF data also highlights that these very small schemes tend to have the highest aggregate funding levels of 102.5%, compared to 92.7% for schemes with up to 5000 scheme members.
Aggregate funding shortfalls therefore appear to be most pressing for medium sized schemes, which account for an even larger share of the UK DB market. The UK pension industry currently has more than 3000 medium sized DB schemes with less than 5000 scheme members.
DB Pension schemes looking to consolidate face have a number of options, ranging from asset pooling to shared administrative services, fiduciary management or the transfer to a Defined Benefit Master Trust.
The Pensions Regulator announced this month the addition of three new master trusts to its list of authorised providers, bringing the total number of authorised providers to 15.
Master Trusts authorised by TPR are: The Aon MasterTrust, The BlueSky Pension Scheme,The Crystal Trust, Fidelity, Industry-Wide Defined Contribution Section (Railways Pension Scheme), Legal & General WorkSave Mastertrust, Legal & General WorkSave Mastertrust (RAS), LifeSight, Mercer Master Trust, National Pension Trust,The Pensions Trust (TPT Retirement Solutions), The SEI Master Trust, Standard Life DC Master Trust, Stanplan A and the Universities Superannuation Scheme (USS).