More sponsors in U.K. embrace outsourcing
Multiemployer providers see influx as plan trustees move to cut costs, meet regulations
Multiemployer plan providers in the U.K. are winning more defined contribution business as sponsoring employers have been more decisive about outsourcing under the pandemic-induced lockdown.
The heightened interest comes as U.K. employers were already increasingly considering outsourcing plan assets to multiemployer plans, known in the U.K. as master trusts, to cut costs at a time when the government has been increasing trustee duties and decreasing support.
Large corporations as well as small and medium employers’ expenses for running defined contribution plans expanded in 2015 when the U.K. government canceled refunds used to offset costs associated with running the plans.
The UK Department for Work and Pensions estimates that employers are missing out on the equivalent to £14.3 million ($19 million) per year due to this change.
Industry sources said employers pay between £400,000 to £1 million ($517,000 to $1.3 million) each per year to cover administration, risk management, advice, and legal and compliance costs.
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