Pensions - Articles - Mercer announces a new team to advise on DB consolidations


Merce announces the formation of a new team focused on providing advice around defined benefit (DB) consolidators*. The move follows support in principle by the Department for Work and Pensions (DWP) and The Pensions Regulator (TPR) for the DB consolidator concept.

 With the focus now on how these arrangements should operate and when are they right for scheme members, rather than whether they should be allowed, Mercer believes there is potentially merit for some schemes to consider investing in consolidators. Headed up by Andrew Ward, the team will draw on wider expertise across risk transfer, covenant assessment, actuarial and investments across Mercer.

 “Consolidators offer sponsors the potential to transfer DB liabilities away from the business at a cost that is lower than insured buyout pricing, said Andrew Ward, Partner and Head of Journey Planning at Mercer.

 “If TPR’s central test of showing that transferring the scheme to a consolidator will increase the chances of members receiving full benefits can be met, then this could be an attractive option for members. However, while consolidators intend to hold capital significantly above typical scheme funding arrangements, they are less secure than traditional bulk annuities. Covenant considerations will therefore be key for any scheme where there is a transfer of risk from the current sponsor to a consolidator.”
 
 Jo Holden, Partner and UK CIO at Mercer, added “Many of the benefits offered by consolidators such as cost savings and availability of a wider range of assets can be achieved by delegated or master trust solutions. Although the consolidators are as yet untested, the bulk annuity market for solvent schemes was also new just over a decade ago and has now become a key risk management tool. We look forward to continuing our work in this developing area to deliver the best results for our clients.”

Back to Index


Similar News to this Story

Pension engagement and profitability go hand in hand
UK businesses that actively engage employees in their pensions are also seeing stronger financial performance—highlighting a powerful alignment betwee
Gen Z dream of retiring at 60
Gen Z hope to retire at 60 – earlier than any other generation and well ahead of state pension age. Yet only 13% are prioritising pension saving and 5
New viewpoint is a dramatic turnaround in scheme funding
For many years, the challenge of funding Defined Benefit pension schemes was a ‘millstone around the necks’ of many sponsor companies. Large and volat

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.