That is according to research released today from Willis Towers Watson’s (WLTW) UK DC master trust, LifeSight, which reveals that this is most evident among FTSE100 firms where master trust usage increased by 13%.
It was also found that the number of hard-defined benefit (DB) closures has increased by 8% over the last two years, with 98% of FTSE350 companies now offering DC pensions to new employees instead.
“With the use of master trusts doubling since 2015, we are now clearly seeing that master trusts are being recognised by employers and existing trustees,” LifeSight managing director, Jo Kite, said.
“While contract-based arrangements usage has marginally shrunk, master trust usage has doubled, showing a clear direction of travel. As many companies are still only part-way through this process, we expect the trend to continue.”
The research, conducted as part of WLTW’s 2017 FTSE350 DC Pension Scheme Survey, reveals that master trust usage is set to rise even further over the next decade.
One of the reasons for this is the flexibility and ease with which they offer members a diverse range of retirement options, according to Kite, with drawdown becoming increasingly popular.
She said that pension freedoms introduced two years ago meant that the adoption rate of these options was quick, and that trustees have a duty to look into solutions for their specific schemes.
Adding: “Crucially, emphasis should be on the strength and quality of governance and management of any master trust under consideration.”
These findings come after a Bill was published last year to ensure that master trusts meet higher operating criteria to keep pensioners’ savings from risk.
This includes giving new powers to The Pensions Regulator, and the introduction of a cap to prevent early exit charges from creating a barrier to members accessing their savings.
Minister for pensions, Richard Harrington, said: “We want to make sure that people saving into master trusts enjoy the same protection as everyone else, which is why we are levelling-up protection to give these savers more confidence in their pension schemes.”
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