As schemes focus on value for money, we explore the first step to significant economies of scale and enhanced governance.
By running multiple schemes in parallel under a sole trustee model, individual schemes can benefit from economies of scale and efficiencies to focus on the strategic issues that make a positive difference to companies and members. Critically, by avoiding formal mergers and legal agreements, the schemes benefit from harmonisation whilst retaining control
Most schemes operate in isolation with few synergies gained across multiple schemes, despite the fundamental governance requirements of every pension scheme being similar. That was until now. By operating multiple schemes in a robust, consistent approach, schemes can benefit from scale without sacrificing focus on scheme specific strategic issues.
How it works
The ndapt multi-trust benefits by running multiple schemes in parallel and sharing resources, such as having the same scheme actuary and investment consultant across multiple schemes within the multi-trust. Trustee meetings run concurrently, but with each scheme having its own documentation and avoiding the need for data sharing agreements.
Whilst schemes are aware that there are schemes operating under the same model, those schemes have little involvement with each other and will not see the output for the other schemes.
Example
Four schemes operate under the multi-trust with the same named scheme actuary and legal adviser. These four schemes were able to take advice on GMP equalisation, which was shared across the four schemes and is being implemented for each individual scheme.
The schemes also hold their trustee meeting at the same time, but the minutes are produced separately. The advisers present once on the background across all four schemes before going through each scheme on a case-by-case basis to apply their advice.
The schemes’ investment strategies are different, but by working with the same investment consultant, the investment managers are harmonising, which further reduces the costs of running the scheme and improves outcomes by greater focus.
Multiple schemes with the same employer
In another example, one company had three pension schemes across the Group. We were able to harmonise the actuarial adviser, investment consultant, legal adviser, and covenant adviser. This immediately generated economies of scale.
The administrators are remaining separate in this case, but the intention is to harmonise valuation dates and scheme year ends to drive further efficiency. This decision was made after a cost-benefit analysis.
Stand-alone scheme
In another case, the scheme does not share any advisers with other members of the multi-trust. In this case, efficiencies are generated from the standardised governance structure that sits across all multi-trust schemes.
In due course, it might be that the scheme moves advisers to share more resource with other schemes, in which case further savings can be generated.
Focus on outcomes
Whilst there are cost savings by joining the ndapt multi-trust, cost is rarely the primary driver. The typical reasons for joining are to focus on delivering a certain outcome whilst ensuring that the governance aspects of the scheme are managed efficiently and effectively.
This outcome might be implementing a series of corporate transactions, to improve relationships, to ensure collaborative working, or to accelerate the period to the agreed end game.
Technology
Embracing technology allows us to produce standard material very efficiently and focus on those aspects of governance requirements that help deliver strategic objectives.
Every document can be tailored for each scheme, but we only make changes where it adds value. Standardised documents allow us to focus on strategy rather than compliance for the sake of compliance.
If you think the ndapt multi-trust might be right for your scheme, then please reach out to us so that we can discuss whether it might work for you. We can discuss your current set-up and how easy it would be to generate the efficiencies of working with other schemes.
To discuss the above, or any other aspect we can help with, please get in touch by emailing marcus.hurd@ndapt.com
