19th October 2020

Pensions Regulator analysis: DB scheme running costs

Defined benefit pension schemes were set up with the best of intentions, but the need for strong governance to protect members’ benefits has placed an ever increasing burden on trustees and employers. Research carried out for the Pensions Regulator clearly shows that smaller defined benefit schemes – those with fewer than 1,000 members – cannot realistically hope to deliver their members’ benefits cost-effectively under the existing highly fragmented and sub-scale system.

A new approach is clearly required, leveraging economies of scale, that addresses the many issues smaller schemes currently face.

Stoneport’s innovative approach allows trustees and employers of smaller schemes to radically reduce running costs to levels not previously available to them, as well as delivering a number of other significant benefits.

This is achieved through its unique structure, allowing it to operate like a single, large scheme, spreading the largely fixed costs of running what are inherently complex arrangements across a much larger number of members. Once Stoneport centralises, targeted to happen on 31 December 2022, the running costs of the smaller schemes that join will reduce again from the levels on joining, by up to 80% relative to what schemes were paying before. Even schemes with close to 1,000 members could typically expect running cost savings of 50 – 60%, or more. For the smallest schemes this will mean costs falling from in excess of £1,000 per member per year, to under £200 in Stoneport.

To find out more about how this is achieved, please take a look at our ‘Explanatory guides’ section on the Stoneport website.