Dalriada.DCC AVC Consolidation
The scalable, cost-effective alternative to legacy AVC arrangements
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Market challenges driving the need for change
For years, Additional Voluntary Contributions (AVCs) and small DC arrangements have remained an overlooked and underperforming aspect of UK pension schemes. Whilst the market for Defined Contribution (DC) pensions has evolved significantly, many legacy DC and AVC arrangements have remain trapped in high-cost, low-engagement platforms that fail to deliver true Value for Money (VfM). As trustees, you face mounting regulatory pressure, rising governance burdens and shrinking provider options, making it clear that action is required.
With shifting regulations, market consolidation and increasing scrutiny from The Pensions Regulator (TPR), you now face a clear choice: continue accepting a suboptimal AVC position or transition to a more cost-effective, well-governed and member-focused solution. With typically no viable alternative market, trustees have needed to accept this suboptimal position, particularly in respect of their AVCs, however, with the Dalriada.DCC, there is now a viable alternative.
The key challenges you face as trustees
Despite the importance of AVCs in retirement planning, many legacy arrangements fail to meet modern expectations, creating unnecessary risks, inefficiencies, and poor member outcomes. The challenges include:
Value for Money (VfM)
Most AVCs charge 0.75% p.a. or more, exceeding charge cap expectations and delivering suboptimal investment performance and member engagement.
Lack of Consolidation
AVCs typically remain fragmented, preventing schemes from leveraging economies of scale and improved oversight.
Minimal Market Innovation
The absence of competition has left AVCs stuck on outdated platforms, with limited investment choice and poor servicing.
Ineffective Provider Communication
A significant portion of schemes report that AVC providers fail to engage members effectively, leading to low visibility and poor financial decision-making.
Providers Exiting the Market
In 2024 Santander exited the AVC market, providing trustees with six months’ notice to transfer their AVC assets to an alternative arrangement, with the default being that if an alternative was not selected the AVC assets would be transferred back to the trustee bank account. Owing to the data records at Santander, in our experience, several trustees did not receive this notification until four months into the six-month period. It is possible that other providers may wish to follow Santander and exit the market.
Buyout & Wind-Up Challenges
AVCs create disproportionate costs and delays during buyout or wind-up. Streamline your process with AVC consolidation, learn more.
AVC Data Compliance Issues
The complexity of integrating AVCs into pensions dashboards poses a major challenge, particularly when dealing with multiple providers using different data structures. Learn more on compliance and governance.
For too long, trustees had no viable alternative - but that has now changed. Dalriada.Defined Contribution Consolidator (DCC) provides a market-leading solution that simplifies small DC and AVC governance while delivering better outcomes for your members.
Our integrated approach
Dalriada leads the entire consolidation process, ensuring a seamless transition while maintaining full regulatory compliance. We work with:
- Smart Pension – Master Trust administration & investment platform.
- Hymans Robertson – Investment advice & actuarial advice where applicable.
- Gowling WLG – Legal advice.
This collaborative, trustee-led approach ensures schemes achieve full efficiency, compliance and cost reduction.
Here is how Dalriada.DCC can make a difference for you
Benefits What it means for you Lower Costs Reduces member charge to a fraction of the typical AVC charge. Stronger Governance & Regulatory Compliance Ensures schemes meet dashboard and decumulation requirements. Trustees transferring AVC liabilities and responsibilities across to the contemporary DC arrangement with Smart Pensions. Simplifies Buyouts AVC consolidation removes potential buyout roadblocks, accelerating the process. Learn more. Better Member Outcomes & VfM Improved member engagement with access to modern digital tools for investment tracking and decision making.
Want to learn more about what VfM really means today? Read Paul Tinslay's blog here.Why trustees must act now
With tightening regulations and provider exits escalating, delaying action on your AVC governance exposes your scheme to unnecessary costs, risks and inefficiencies.
Dalriada.DCC is your strategic partner to reduce costs, ensure compliance and significantly enhance Value for Money (VfM) and member outcomes.
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Get in touch with us
Call us on 028 9041 2018 or fill out the form below and someone will get back to you.
