A framework must be developed to enable trustees to decide if moving their scheme into a consolidation vehicle is the right thing to do, Redington has suggested.

Trustees should be given a specific set of questions that govern the overall decision, looking at all areas including investment, funding, covenant and legal requirements, before they choose to move the scheme into a consolidator.

In December, the government launched a consultation on the consolidation of defined benefit pension schemes, outlining its regulatory approach, but offered little to help trustees to decide whether this would be the right decision for their specific scheme.

Last year, a Willis Towers Watson survey found that just one in four trustees were comfortable in judging whether to hand over their schemes to ‘super funds’, despite their sponsor’s growing interest, highlighting the uncertainty of trustees.

Redington head of integrated consulting, Marian Elliott, said: “Fundamentally, moving a scheme to a consolidator will be a very big decision for any group of trustees. We think what is most needed in this situation is a framework for making the decision.

“This framework will be quite specific to each scheme and will allow trustees to form an overall picture. It can then be used to compare options and simplify what is a complex decision.”

DB consolidators looking to enter the market will be required to approach The Pensions Regulator before doing so, with the latter responsible for assessing the consolidators business model, financial stability and governance.

The regulator has published guidance for employers, super funds and trustees ahead of authorisation.

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