Thank you to Go Pensions for providing with us of a number of views of the Workplace Master Trusts. They have 19 of them, there are some that are technically included but which are not commercial, this could best be called the commercial universe and it includes schemes such as Options that next year will be consolidated.

Go Pensions go beyond the 19 mastertrusts, with insights on…

This report is an entry to Go Pension’s research.

Go Pensions is a kind of research brokerage I grew up with. Susan Phillips and Tina Oversby have careers in scheme management and know what it is to run them.

What does this second edition of this helpful work tell us

Let’s look first at master trusts by the number of members. There are some objective differences to other tables, especially comparisons by funds under management (FUM).

The second chart is rejigged to show how scheme compare by size of employer. Again we see organisations with high numbers of employers tend to have high numbers of members but there are really only five “mass market” master trust provides (we might call them open to all without underwriting). They are Nest, Peoples , Smart , Now and Cushon.

But things change when we see league tables for master trusts ranked by funds. Here we see the enormous difference between Nest and Peoples compared with Legal & General and Lifesight (WTW). This is created by saying yes or no. The underwritten propositions have large amounts of asset per employer though it is only WTW that has got the average per member to a level that would buy the average pension in say LGPS (£7,500 pa). Others rivalling them for average pot per member are Aon and Mercer but it is worrying that the small number of employers and members at the bottom of the table may prove good underwriting but not success with regards scale.

It is clear that the insurers and consultants have means to increase scale through taking over DC schemes operated by large employers who may have a DB heritage. These employers may have higher average salaries, they may have higher reward through pensions and they have a history of pension contributions going back some time. Most importantly, the insurers and consultants will compete to take over business rather than initiate it. Very little of the staging of workplace pensions was carried out by the selective master trusts, the bulk of it was carrying out by Nest, People’s Now, Smart and Cushon.

The size of assets under the control of People’s and Nest leads the league table but Nest and Lifesight are managing nearly £60bn for less than 400 employers.

The economics of these types of schemes are very different. The high asset per member schemes are more profitable and it is extraordinary how Peoples has achieved what it has without the subsidised loan and the cost charging of Nest.

What these tables don’t show is the performance for members of the various scheme defaults. This performance monitoring is top down – using the measurement based on scheme prices adjusted for charges. We don’t think that’s satisfactory, we’d like to see performance based on the internal rates of return achieved by members in the scheme, this can be very different but tells us what actually happened to contributions.

The best we will get for now is from Cap Data – the subsidiary of Corporate Adviser. Add this to this scheme level information and you get a means to consider workplace pensions going forward.

The next big step is towards paying people money back. This is called decumulation in the trade but for most people it is what they think is the pension they have bought (purchased).

Good on Go for giving us this information. Let’s make sure we have more complete information on which employers and members can make decisions based on what they consider “value for money”.