Stoneport, the UK consolidator for small defined benefit (DB) schemes, has appointed Mobius Life Ltd as its investment platform provider, as recommended by the trustees’ advisory firm, Barnet Waddingham.
The new investment platform is a “major step forward” for the consolidator, which helps smaller schemes reduce their running costs, improve their governance, and increase the likelihood of member benefits being paid in full, Stoneport announced.
Stoneport, which was launched last year to encourage consolidation among UK occupational DB pension schemes with fewer than 1,000 members, aims to have assets of around £2.5-3.5bn once it has fulfilled its quota.
It runs a unique scheme that allows participating employers to retain a share of control in their investment strategy, whilst also being part of a consolidator vehicle that will enable them to target buyout in the longer term.
Small DB schemes in the UK with less than 1,000 members each are responsible for providing the retirement benefits of almost one million members, but these individuals are split across some 4,350 different schemes, nearly all separately administered, Stoneport said.
Along with increased legislative pressures and a lack of scale to run efficiently, it added, small schemes end up shouldering running costs of more than £1,000 (€1,175) per member, per year. This compares to less than £100 for the largest schemes.
Created and managed by Punter Southall, with actuarial, administration and investment advisory services provided by Barnett Waddingham, Stoneport claims to be the only UK consolidator to offer a solution targeted at small schemes that stand to benefit most from consolidation.
Mobius’ appointment is a “major milestone” for Stoneport and highlights how the consolidator can provide a first-class service to small schemes at affordable prices, said Stuart Southall, an independent trustee of Stoneport.
The platform will host most of Stoneport’s investment funds – which small schemes will be able to access without having to do their own market review, it added.
Ian Mills, partner and senior investment consultant at Barnet Waddingham, said that Stoneport trustees “asked us to look at ways that incoming schemes’ assets can be transferred in to Stoneport efficiently and then managed cost-effectively during the scheme’s growth phase”.
“As independent advisers we considered a wide range of different investment structures to get the best possible results for our client, the appointment of Mobius will in turn help the scheme reach its desired outcomes,” Mills noted.
Adrian Swales, chief executive office at Mobius, said the firm’s approach to delivering platform services offers Stoneport a highly efficient investment administration service.
“This will enable them to respond quickly to developments in investment strategy, transition and onboard additional schemes efficiently and benefit from rebalancing and de-risking opportunities as they occur,” he said.