Defined Contribution  

L&G is fastest growing master trust

L&G is fastest growing master trust

The three fastest growing auto-enrolment master trusts by assets under management have been revealed in a research report published by the DC Investment Forum (DCIF).

Top of the rankings is Legal & General, which has projected annual contributions of £451.5m into its WorkSave Master Trust and its RAS Master Trust over the next year, the report for the DCIF found.

This figure will be added to the £2bn the two L&G master trusts already have under management.

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The second fastest growing trust is the People's Pension which is projected to receive £435m over the next year to add to the £958m it already has under management.

Close behind is Nest which has £1.2bn in assets under management and is projected to receive contributions from its members of £419 million in 2017.

The research also canvassed 17 master trusts about their current investment design strategies and the issues they currently face.

The report found that to date master trusts have focused on administration, communication and governance with investment design much less of a priority. 

As master trust schemes become more established, the report called for an increased focus on offering innovative and modern default investment solutions to achieve the best possible outcomes for members.

DCIF executive director Louise Farrand said: "The DCIF believes that an effective investment strategy is fundamental to the success of a pension scheme and ultimately results in better retirements for members.

"Whilst it is very early days for both master trusts and the auto-enrolment process, we want investment to become a more competitive feature in the future and are very keen to be part of this process.  

"The report also shows that value for money is an important issue. We therefore hope that prospective investment returns, and the suitability of risks taken for each group of members, will feature more prominently in the future."

Scale in the auto-enrolment market is key to the survival of such master trusts, as the government is to pass legislation this spring making life harder for smaller trusts.

Its intention is to force smaller schemes to merge with larger schemes as it wants to ensure all UK employees can save into a trust with the scale to purchase fund management services cheaply and to have high governance standards.

The next three fastest growing master trusts in the report are the Standard Life DC Master Trust which will receive £246m over the next year, followed by Now Pensions at £144m and the Pensions Trust at £139m.

The research of 17 master trusts was conducted by Nico Aspinall, a former defined contribution consultant for Willis Towers Watson who now runs his own consultancy firm. The DCIF report is called Investment Designs - a Comprehensive Study.