Whether to enter a DB Consolidator (or "superfund") is a complex decision. Sponsors and Trustees must be sure it is the right decision for their scheme and its members.
Now that the Pensions Regulator has provided clarity on how it will regulate DB consolidators, we expect this market to open up in the coming weeks and months.
We have extensive experience in helping our clients achieve the best de-risking solution given each of their unique circumstances, as highlighted by the market-leading number of buy-in transactions we have led. The best solution could be DB consolidation but you can be confident that we have the right experience to help you explore all options to get the best outcome for your scheme.
How we can help
DB consolidators offer a new route for scheme sponsors and trustees to pass their scheme to a third party, similar to a buy-out process with an insurer. This is a nascent market which is being developed under the supervision of the Pensions Regulator and with the support of the Department of Work and Pensions. Schemes which were the first movers in the buy-in/out market over a decade ago seized some of the best opportunities. We expect a similar situation for early movers in the DB consolidation market.
Those schemes interested in exploring the early opportunities from DB consolidation need strong advice and access to specialist comprehensive knowledge. LCP’s independent DB Consolidator team has a blend of commercial pensions expertise, covenant specialism, and transaction experience drawn from our corporate M&A, covenant teams and LCP’s market leading buy-in/out practice.
We can help sponsors and trustees identify and assess whether a DB consolidator is likely to be right for them. We can help you to understand the costs and risks involved and to evaluate how these compare to other de-risking options. Our stochastic covenant model will help the decision-making process.
The knowledge and expertise we have built up, and our wider research, ensures that LCP is well positioned to help you evaluate the DB Consolidator option. LCP has undertaken detailed research into the main providers – Clara-Pensions (Clara) and the Pension SuperFund (PSF) – as well as meeting with other potential entrants to the market.
Separately, ring-fenced LCP teams provide advice to consolidators (and potential consolidators) and have advised them on their development.
DB consolidation is not going to be right for all schemes. If it could be for your scheme, LCP will provide you with the joined-up holistic advice you need, and we will lead you through to a transaction at a competitive price; being sure to give you clarity on comparable alternatives along the way, with the aim of achieving the best outcome available for members. We have already helped our clients with training sessions on DB consolidators. We have the materials and tools to prepare incisive training sessions for trustees and sponsors. Where they may be an appropriate solution for a scheme we have prepared a feasibility analysis.
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How we can help
We are market leaders at each stage of de-risking, including planning, investment strategy, transactional services and wind up.
We help sponsors of pension schemes understand and manage the costs and risks associated with supporting their current and legacy pension schemes as well as other employee benefits.
We help you understand and report on pensions obligations and risks.
We help companies navigate through the complexity of pensions provision.
We help clients identify, manage and monitor pensions risks in an integrated way.
We help trustees achieve their strategic goals, with solution-led, appropriate advice.