Fidelity Worldwide Investment is to launch a mastertrust in response to demand it has seen from blue-chip companies for tougher governance and bespoke investment strategies.
The launch further boosts the growth of the mastertrust as a halfway house for employers who want more than the bare minimum defined contribution investment governance without the full responsibility of running their own trust-based scheme.
It also reflects the growth of the secondary auto-enrolment market, as a recent survey shows more than one in four employers are already unhappy with their auto-enrolment set-up.
The provider, which has 451 UK DC clients, is setting the scheme up as an alternative to the “one-size-fits-all” mastertrusts available in the market.
The provider expects to announce over the summer the independent trustee company selected to provide oversight, and has said it will not sit on the board of trustees.
“We are very firmly of the view that good governance does deliver good outcomes,” said Richard Parkin, head of proposition for DC and workplace saving.
The company’s DC business development director Daniel Smith said employers had shown demand for bespoke default investment strategies. “They are going to be working with the trustees and us to put in place something for [members].”
As mastertrusts have grown, so has debate over their governance. Phil Rixon, pensions and benefits manager at Ladbrokes, emphasised last week the importance of the employer’s pension steering group to monitor its scheme.
“It might be a radical change and we might have to change our entire pension provider, but we have the appetite to do it given the right circumstances,” he told the National Association of Pension Funds’ DC forum.
A survey released last week by provider Benefex found 28 per cent of employers that had passed their staging date regretted their auto-enrolment choice.
Most of these “were looking to do something within the year” to change set-ups that left them with too much administrative burden, or bad interfaces between different payroll and pension systems, according to CEO Matt Waller.
This discontent has extended to employers already reconsidering their investment set-up. “We have heard a number of things [along those lines], but that is more anecdotal,” he added.
