PLSA finds strong support for DB consolidation

The Pensions and Lifetime Savings Association (PLSA) has found that pension professionals strongly support DB consolidation — as long as they can be confident that member outcomes would be improved by the process.

In a poll conducted at the PLSA Annual Conference & Exhibition on 16 October, the organisation discovered that 89 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 a better chance of receiving their accrued benefits.

At the same time, eight out of 10 delegates questioned about the DB universe at the conference thought that the number of DB schemes would fall from 5,500 today to below 4,000 in 10 years’ time, with nearly half (48 per cent) predicting that there could be fewer than 3,000 schemes wihtin the next decade.

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

In light of the PLSA’s findings, Joe Dabrowski, head of DB, LGPS and standards at the PLSA, said that it was disappointing that there were no provisions in the recent Pension Schemes Bill to establish a statutory authorisation regime for superfunds.

The PLSA believes that superfunds — which are designed to provide a new consolidation option for under-funded DB schemes — create an incentive and achievable goal for employers to accelerate funding into schemes.

“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,” said Dabrowski.

“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.”

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