The future role of DB pension schemes

Consolidation is the future of DB pensions - whether we like it or not it’s happening! From capital backed regimes (eg Clara), to professional trustees and risk transfer. What about DB Master Trusts? Well, the benefits of joining are huge, and thousands of schemes stand to reap those benefits. So why are they missing out? We think the market just needs to hear these benefits more regularly and with a bit more clarity. So we thought we’d start driving this today.

Encouraging DB Master Trust consolidation

What are these benefits we talk about?:

- Lower administration costs – this solves a key challenge for sponsors. In Citrus, lower costs also come with greater value driven by access to a sole professional trustee and quality advisers.

- Quality governance – a key concern highlighted in the 2018 White Paper. More schemes moving to DB master trusts would certainly see the governance challenges observed in the market reduce. For sponsors, accessing this professional expertise saves them management time and ultimately cost, as a clear path to buy-out is delivered…..

- Delivering long-term objectives, cost effectively – Citrus focuses on achieving end-game objectives of employers and a slick framework simplifies the path to getting to buy-out and securing member benefits.

Each of these benefits solves major challenges that exist in the DB market for sponsors (reducing costs, reducing time, delivering buy-out efficiently to further eliminate costs and time in future) and ultimately increase member benefit security (delivering buy-out with risks well-managed in a shorter timeframe). Given all this, DB master trusts need more press coverage and support across the industry, as we all want to deliver better outcomes for members.

But what of the myths – reduced control for sponsors and one-size fits all approach?! Not in Citrus. Sponsors remain consulted on the key decisions ie funding, investment and buy-out decisions. Sponsors retain their seat at the table, whilst the hard yards in running the scheme are taken on by the Trustee. There’s no restrictive framework either. Hard work has been put into the funding and investment options to allow it to be run efficiently, delivering the cost savings, but allowing flexibility to meet all employer objectives. So sponsors don’t lose anything, they just reap the benefits.

Citrus welcomes and encourages any type of support consolidation to DB master trusts gets. 

Get in touch to find out more information about how your DB pension scheme could benefit from joining Citrus.