U.K. defined contribution plan sponsors are reviewing multiemployer plan providers as the U.K. government continues to push employers and trustees to examine if plan participants are receiving good value for their investments.
The U.K. government said June 21 it wants to see further consolidation in the DC market to improve retirement outcomes, which sources said could push more employers to consider outsourcing to a master trust. Sources said that trustees of larger plans also might be required to review investment providers in order to see if outsourcing could help improve outcomes for plan participants. Such reviews could encompass plans with assets of up to £5 billion ($6.9 billion), they said.
Trustees of smaller plans with less than £100 million are already required to determine if their plan participants could be getting better value from another provider, which could include a multiemployer plan, known in the U.K. as a master trust.
Meanwhile, plan sponsors that have already outsourced their DC arrangements to master trusts over the years are looking at, and in some cases already are, switching providers because they are finding that other master trusts can supply a more attractive offering.
Consultants said that first moves from one multiemployer plan to another are underway as plan sponsors want to improve investment performance and improve participant engagement.
Companies also want to reflect their own sustainable investment strategies, including carbon emission reduction pledges, in the policies of their master trust providers.
"We are doing one transfer at the moment from one well-known master trust to another," said Mark Futcher, partner and head of DC at consultant Barnett Waddingham LLP in Amersham, England, adding that the provider's investment performance was the trigger for the change. He declined to name the plan sponsor or the master trusts.
A survey of FTSE 350 companies conducted by Willis Towers Watson PLC published July 12 showed that 12% of employers that already use a master trust are considering a review of their provider in the next two years.