Pension experts support more options for scheme consolidation | PLSA

Navigate to ...

Pension experts support more options for scheme consolidation

29 October 2019

•    Eight out of 10 pension experts expect the number of DB schemes to fall from 5,500 to below 4,000 in the next decade
•    Eighty-nine per cent of pension professionals support more options to consolidate DB schemes where confidence of an improved member outcome is high
•    Superfunds have the potential to strengthen the security of millions of savers in DB schemes

Pension experts anticipate further pension scheme consolidation and support having more options to safeguard savers’ benefits, according to recent polling by the Pensions and Lifetime Savings Association (PLSA).

Feedback from delegates surveyed in a spot poll at the PLSA Annual Conference & Exhibition on 16 October showed eight out of 10 thought the number of DB schemes would fall from 5,500 today to below 4,000 in 10 years’ time. Nearly half (48%) believed there could be fewer than 3,000 schemes in a decade.
An earlier poll in a session focused on scheme consolidation revealed pensions experts are already readying for a future where fewer funds oversee a higher percentage of pension assets and support additional avenues for employer schemes to secure their defined benefit pension benefits.

Eighty-nine per cent of pension professionals said they would consider consolidating a single employer DB scheme into a DB master trust or DB superfund if they could be confident that scheme members would have the same, or better, chance of receiving their accrued benefits.
Superfunds are designed to protect member benefits by providing a new option for under-funded defined benefit pension schemes to consolidate. They create an incentive and achievable goal for employers to accelerate funding into schemes.

The survey results come as the Work and Pensions Select Committee calls superfund executives to give evidence on the Pension Schemes Bill in Westminster on Wednesday 30 October.

Joe Dabrowski, Head of DB, LGPS and Standards, PLSA, said: “It is disappointing there are no provisions in the Pension Schemes Bill to establish a statutory authorisation regime for superfunds. 

“Under strong governance, robust capital buffers and the appropriate affordable supervisory regime, superfunds have the potential to strengthen the security of the millions of savers in DB schemes whose sponsoring employers face an uncertain future. The availability of the superfund option would also provide an incentive for sponsors to accelerate scheme funding in exchange for a complete and clear-cut discharge of their liabilities. This in turn reduces the risk to members’ benefits as a result of their sponsor’s future insolvency and reduces the potential burden on the Pension Protection Fund.

“If implemented properly, the new regulatory framework will provide schemes and millions of members with new options to make pensions safer.”

Mark Smith, Senior PR Manager
 020 7601 1726 |  [email protected]k