There is a trend now for smaller retirement funds to move to umbrella funds which can look after multiple participating employers. There are many benefits as umbrella funds are able to provide equivalent services at a lower cost. The professionalization of trustees also means that while trustee costs are going up, an umbrella fund only needs one board of trustees to look after all its employers.

However, there are potential drawbacks, a one size fits all approach means that there is less scope for tailoring for different employers or groups of employees. Further, the temptation is for employers and employees to just let the “experts” get on with it. The problem is what happens today will have consequences in 20 years’ time and successful retirement is a vital responsibility to leave in someone else’s hands. Fortunately, there are ways to enjoy the cost efficiency of an umbrella fund while still maintaining some elements of control.

Each employer can set up a management committee to represent its (and its employees) interests with the umbrella. This committee works like a board of trustees, but with less formality and responsibility.

Another control is to continue to contract in investment expertise like asset consultants, investment advisers and asset managers to have oversight and input into investment issues such as asset allocation and portfolio structures, etc.

Umbrellas are a good option for smaller retirement fund, but employers and members should continue to actively participate through management committees and the use of expert investment advisers.