STM Group said in a 14 June update on its planned strategy in relation to the UK master trust market that it had entered into a commercial agreement with Smart Pension Limited to transfer members from its Options Master Trust.
The AIM-listed cross-border retirement, life and admin provider said: "The workplace pensions sector has undergone a significant amount of consolidation in the past few years and the continued pressure on margins, as well as additional regulatory costs and burdens, means that a smaller innovative master trust is less commercially viable."
The deal, potentially up to £4.8m in consideration for STM, paid over two years, with additional revenue expected from an introducer agreement with Smart.
The consideration will initially be retained by STM, with further use of proceeds to be decided by the Board of the Company as they are received over the three years following completion of the transaction, the statement said.
STM currently carries on its UK workplace pensions business through the Options Master Trust (OMT), which is administered by Options Corporate Pensions UK limited (OCPL).
OCPL recorded revenues of £4.5m and a profit before tax of £0.5m for the financial year ending 31 December 2023. The Options Master Trust has a membership (including deferred members) in excess of 300,000 individuals, across circa 3,700 participating employers.
The agreements with Smart will include companies affiliated with Jambo, once Jambo becomes the shareholder controller of STM.
Alan Kentish, CEO of STM Group, said: "We have got to know the Smart team over the last 18 months, and have been impressed with their vision and supporting technology. We believe that Smart would provide a good home for our membership base, and that it will always act in the members' interests.
"Whilst STM, has grown its master trust business since acquiring it in 2019, and had created an innovative business model as an alternative to the one-size fits all master trust, it is clear that continuing regulatory burdens and consolidation activity mean that it is an opportune time for STM to proceed with its strategy of transferring the UK master trust operation."
Jamie Fiveash, CEO of Smart UK, added: "I'm delighted that the agreement announced today will enable us to further expand the benefits of Smart Pension to be provided to more UK pension savers within the Options Master Trust, bringing value, along with our best in class customer experience and technology, to all its members. As a market-leading consolidator, we look forward both to another successful partnership and implementation, and to further opportunities with the wider STM and Jambo Group."
