Hymans Robertson, the leading pensions and risk consultancy, has compiled an in-depth analysis, DB Consolidation: One year on, as a guide for corporates and trustees to navigate all methods of consolidation and show how the market is expected to continue to evolve.
Commenting in the growth of commercial consolidation and the breadth of consolidation tools available today, Alistair Russell-Smith, Partner and Head of Corporate DB Consulting says: “In just one year since the DWP’s white paper on DB schemes we have seen a flurry of regulatory and market activity, with momentum continuing to build. Despite many forms of consolidation having existed for decades, the industry-wide drive to lower costs, reduce risks and improve member security has triggered a greater awareness and demand amongst trustees and sponsors for the potential benefits consolidation can achieve.
“Naturally, much of the industry debate and market interest over the past 12 months has been focused around commercial consolidators such as the Pension SuperFund and Clara-Pensions. With the first commercial consolidation transaction expected within the next few months and healthy prospective pipelines for both it is clear that consolidation has captured the industry’s imagination. While market interest and awareness is rising, there is still some work to do. In fact, our research shows that over a third of trustees still haven’t heard of either of the two vehicles.
Commenting on the wider consolidation landscape, Alistair continues: “Not only should trustees and sponsors understand and consider the merits of these newer commercial consolidation vehicles as end game solutions, they should also assess the wider consolidation spectrum which can help them get to the end game more efficiently by reducing costs or simplifying governance. When viewed through this wide lens, consolidation can include a range of measures like moving into a DB master trust, using an investment platform or appointing a sole professional trustee. DB trustees and sponsors now have much more choice around the ultimate goal for their scheme, and how they can get there most effectively.”
DB Consolidation: One Year On
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