‘Mastering Change: Expertise in DB Scheme Consolidation’

DB scheme consolidation can be a daunting task for many trustees and sponsors, as determining the best option for their scheme can be challenging. However, Jonathan Jackaman, the Head of Business Development at TPT, sheds light on the available possibilities that can benefit schemes at any stage of their journey.

In 2018, the Department for Work and Pensions (DWP) released a white paper on ‘protecting defined benefit pension schemes,’ which spurred the development of a variety of new products and services aimed at helping trustees and sponsors adopt consolidation strategies. While defined contribution (DC) programs are the norm for most UK businesses, consolidated DC arrangements have become increasingly popular. This shift towards consolidation in DC schemes has paved the way for trustees and sponsors to explore similar efficiencies and economies of scale in DB schemes.

Consolidating various aspects of operating a pension plan can lead to significant time and cost savings, improve quality, and reduce the burden on trustees. Jackaman highlights the importance of determining the best consolidation method for each scheme, sponsor, and members, and suggests that a combination of consolidation options may be beneficial throughout the scheme’s lifecycle.

The benefits of consolidating DB pension schemes are numerous. Cost minimization is a significant advantage, as consolidation allows for economies of scale, streamlining administrative processes, reducing duplicate efforts, and leveraging bulk purchasing benefits. Improved regulation and governance are also key benefits, as a consolidated structure enables better decision-making processes and compliance with evolving legislation. Additionally, risk management is enhanced through diversification of investment portfolios, and greater accessibility to funding and investment opportunities is achieved through larger, diversified asset pools.

TPT, a leading pension services provider, offers creative solutions for defined benefit pension plans. With a focus on navigating the evolving pension market, TPT provides tailored assistance and bespoke solutions to meet the specific needs of trustees and sponsors. By leveraging the benefits of DB scheme consolidation, pension schemes can optimize their operations, enhance governance, and secure a more stable financial future for their members.