Mercer launches Master Trust for UK defined benefit pension schemes
Mercer has launched its UK Mercer DB Master Trust, which offers pension scheme sponsors the potential for enhanced governance and economies of scale to deliver better outcomes for members.
A DB Master Trust is an occupational pension scheme for multiple non-associated employers with each employer included in their own section. Under the Mercer DB Master Trust, Mercer will be responsible for providing all services including investment with fiduciary management, journey planning, actuarial services, covenant assessment, scheme management and administration, with trusteeship provided by independent professional trustees. The employer retains ultimate responsibility for the funding of the scheme. This new solution adds to Mercer’s existing advisory and fiduciary offerings and ensures clients can access a full spectrum of approaches to select the best fit for their individual governance needs.
Benoit Hudon, leader of Mercer’s Wealth business in the UK, says: “Managing employee pension schemes has become increasingly complex and many organisations suffer from time or cost constraints. These challenges are particularly acute in the case of smaller or mid-sized legacy DB arrangements where a dedicated internal expertise is often lacking, and access to best-in-class capabilities can prove expensive.
“The Mercer DB Master Trust offers clients a simple off-the-shelf solution that brings the best of Mercer’s scale and capabilities to help potentially reduce fees and improve outcomes. It uses the buying power of our fiduciary management platform, with around GBP250 billion of global assets under management, passing these savings back to clients. It also gives members access to the largest administration of private sector pensions in the UK, which, combined with offerings like Mercer Money, provide a unique and unmatched experience to individuals.”
Andrew Ward, UK Head of Risk Transfer and Journey Planning, adds: “With a clear journey plan agreed up front with the client, the Mercer DB Master Trust will take on the day-to-day operations of the scheme. This way, sponsoring companies can focus on strategic issues such as reducing the longer-term risks the scheme presents to the balance sheet and the ultimate settlement of the benefits.”
The Mercer DB Master Trust has evolved from the Federated Pension Plan (FPP), an existing and long-established Master Trust initially set up by Jardine Lloyd Thompson that currently has cGBP260 million of assets and 73 participating employers. Traditionally, the FPP focused on public sector outsourcing arrangements. It is one of only a limited number of Master Trusts with a passport from the Government Actuary’s Department confirming that it can provide broadly comparable pension benefits to the public sector.
Ward says: “By building on the strong base of the FPP and adding the expertise and scale offered by Mercer, the Mercer DB Master Trust provides a smart solution for private sector clients looking to manage legacy DB liabilities.
“As part of strengthening the offering, we are delighted to announce the selection of ITS and PTL as additional professional trustees to work alongside PAN Trustees who has been the Trustee of the FPP for over 15 years.”