Consolidation is not the only option for sustainability and security in defined benefit pension schemes, SEI has said.

In response to the Department for Work and Pensions’ Green Paper: Security and Sustainability in Defined Benefit Pension Schemes, SEI focused on sections 344 - 410 relating to the consolidation of DB schemes.

The company agreed with the DWPs overall view that there is a need to make the delivery of DB pensions more efficient and that economies of scale, with lower costs for members and more effective investment performance.

Rather than consolidation of these schemes, however, SEI explained that many of the benefits to consolidation identified in the paper could be achieved through fiduciary management instead.

Fiduciary management would be a “more viable option… whereby the trustees are able to delegate responsibility for the day to day running of the pension scheme whilst maintaining overall control,” SEI said.

“Fiduciary managers can provide smaller pension schemes with efficient and lower cost exposure to a range of asset classes, investment styles and investment managers,” it added.

Furthermore, in reference to the possible use of consolidation vehicles, SEI suggested a system whereby there are DB master trusts for the smallest end of the market, schemes below £15m and fiduciary management for any scheme above £15m may be more viable.

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