Report: DB Taskforce: The Case for Consolidation

This report examines four models of consolidation – the process of bringing together and simplifying some or all the elements of defined benefit (DB) pension provision.

The Pensions and Lifetime Savings Association report considers options including: consolidation of administration functions, pooling of assets, combining governance and pooling liabilities. Beyond this, it sets out an approach for the creation, authorisation and supervision of Superfunds, which can absorb existing schemes and permit employers to discharge their obligations in respect of transferring benefits.

Key findings:

• Consolidation is beneficial. However, it does not materially reduce members’ exposure to risk.
• Making a real impact and reducing materially the risk to members’ benefits requires bolder action.
• Removing the employer altogether, in return for financial consideration to replace the value of their covenant, and pooling both assets and liabilities in a new type of authorised ‘Superfund’, has the potential to transform the sector.