Dalriada Trustees has launched a Defined Contribution Consolidator (DCC) solution aimed at transforming the legacy Additional Voluntary Contributions (AVC) market, addressing long-standing issues around cost, member engagement and scheme governance.
The new solution, developed in partnership with Smart Pension and supported by advisers Gowling WLG and Hymans Robertson, offers a lower-cost, scalable alternative for trustees grappling with outdated AVC platforms.
According to Dalriada, many existing AVC arrangements sit on legacy systems with minimal digital functionality, limited retirement options and member charges at or above the 0.75% annual cap.
The DCC aims to consolidate AVC pots into a modern master trust platform, significantly cutting costs and improving member outcomes.
The solution features an “off the shelf” design with a member charge well below the typical market rate, access to high-quality default investments, decumulation options and a digital-first experience including online tools, a dedicated helpline and enhanced communications.
A “switchback” option at retirement will also enable tax-efficient use of AVCs, including added years or tax-free cash.
James Fitzsimmons, co-creator of the DCC and accredited professional trustee at Dalriada, said: “Trustees have struggled to improve additional voluntary contributions terms and the investment platforms available to their members due to cost barriers, resource constraints, complexity and lack of a viable market, particularly for schemes that can only negotiate in isolation.”
The initiative is also designed to alleviate trustee and employer burdens in a more demanding governance landscape, he added.
The consolidation reduces ongoing administration, supports compliance with upcoming pensions dashboard and decumulation legislation, and may help streamline the buyout process by removing small, costly AVC pots.
Smart Pension’s business development director Gavin Collinson added: “Given the government mandate for DC consolidation, we’re excited about the possibilities for expanding this first-of-its-kind solution. Together, we’re solving many of the issues faced by the AVC market, ultimately helping more and more people save for a better retirement in a way that suits them.”
Dalriada’s consolidator proposition is now live for the schemes where it acts as a professional trustee, with the potential to expand its reach further as the AVC consolidation trend gathers momentum.
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Venilia is editor of IPE.com.
She joined the IPE editorial team in November 2019 after freelancing for FT Adviser and LAPF Investments, while also being a publisher for market intelligence company Clear Path Analysis.
She started her career at Euromoney Institutional Investor where for 16 years was reporter and editor covering the asset management industry globally.View full Profile
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