Towers Watson is to launch an independently governed master trust as it looks to gain from the growing UK defined contribution (DC) market.

Master trusts are multi-employer DC trust-based schemes run by third-party organisations.

The consultancy said the offering was aimed at larger employers that prefer the independent governance of trust-based schemes but with a pricing structure similar to contract-based DC schemes offered by insurers.

It will provide a fully outsourced solution to DC savings.

Towers Watson said it expected DC assets to triple in the next decade.

It appointed Fiona Matthews as managing director of the scheme, with the board chaired by independent trustee Donald Brydon.

Paul Morris, head of EMEA at Towers Watson, said cost and governance were priorities but that the scheme design was focused on member experience and functionality.

In other news, the deficit among defined benefit (DB) schemes within the FTSE 350 has increased by £27bn (€35bn) since the start of 2015 as falling corporate bond yields continue to push up liabilities.

The research, conducted by UK consultancy Hymans Robertson, found liabilities had risen by £42bn between 1 January and 19 January, with deficit rises stemmed by a £15bn increase in assets.

Real yields since the start of the year have dropped by 25 basis points, the consultancy said, with 15-year iBoxx corporate bonds hitting historical lows on 19 January.

Jon Hatchett, head of corporate consulting at Hymans Robertson, said 10-year interest rates on corporate bonds were 3% at the start of last year, and have now almost halved.

“Capital market volatility is an inescapable reality,” he added.

“Market sentiment about economic conditions can change very quickly. What we see today is a dramatic turnaround from several months ago, when everyone thought interest rates would rise and the gradual unwinding of QE was on the horizon.

“The picture at the end of 2014 was ugly, but it keeps getting worse. This will now be of greatest concern to the many companies whose year-end reporting falls on 31 March 2015.”

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