The DB pensions landscape has evolved at pace over the past couple of years on the back of the 2022 mini-budget. A number of pensions schemes have found themselves in a significantly improved funding position, now bringing a greater focus on their endgame goals.
Whilst risk transfer has historically been the preferred solution, the improved funding positions has resulted in a growing focus on other endgame solutions such as run-on, superfunds, capital backed journey plans and the operating models to be adopted which includes consolidation vehicles such as multi-trust and master trust.
The Rise of DB Pension Scheme Consolidation
Despite the improved funding position for some schemes, there are still a number of schemes that are a way off from reaching their endgame. As a result, they face additional challenges associated with managing their Defined Benefit pension schemes to ultimately help secure their members’ benefits. This is due to factors such as:
● Increasing regulatory and governance burden
● The need for more sophisticated and integrated risk management
● Increasingly complex adviser operating models
● Assessing whether they are receiving genuinely independent advice due to the structure of some advisers’ business models
● the time burden of managing multiple advisers
● rising costs from advisers, regulatory levies and service providers;
● Lack of scale (particularly for small to mid-sized schemes) to get access to specialist investment funds and strategies in a cost-effective way
To address these challenges, the UK government and The Pensions Regulator have been driving a shift towards greater consolidation of DB pension schemes. The goal is to improve governance, reduce costs through economies of scale, and ultimately enhance security of members’ benefits.
As a result of innovation in the pensions market over the last few years which is expected to continue to evolve over future years, pension scheme trustees have different consolidation solutions that can help them achieve better outcomes for their members and sponsors.. In this article, we will discuss how TPT Retirement Solutions, a leading provider of DB consolidation services, has introduced a new multi-trust) proposition that provides fiduciary management as part of an integrated service proposition.
What is DB Connect?
Having spoken to many trustees and sponsors, there was consistent feedback of a lack of solutions that offered the benefits of consolidation without having to change the existing trustee structure. In response to this, TPT have introduced its DB multi-trust proposition called DB Connect. DB Connect enables trustees of a DB pension scheme to consolidate core services including fiduciary management, actuarial, covenant, and administration with TPT as a single provider. However, crucially, the existing trustee board remains in place to oversee the scheme’s strategic direction.
Through our ownership structure and by integrating and streamlining core services, DB Connect provides:
● The creation of a more efficient and streamlined scheme, making it easier for trustee(s) to manage.
● Greater accountability in service provision through one integrated provider.
● Full fiduciary management implementing a sophisticated investment strategy that is operationally simplified.
● Seamless data flow between actuarial, administration and investment
● Reduction in running costs through our scale
● Less time spent on managing multiple advisers allowing great focus on pension strategy such as endgame.
● a focus on service quality rather than fee generation.
● Flexibility in helping schemes on their journey to endgame.
Jonathan Jackaman, TPT’s Head of Distribution, stated “DB Connect was introduced to provide a genuine consolidation model for pension schemes where the trustee wants to remain in place. Integrating services leads to lower costs and greater efficiency.”
You can view more information at https://www.tpt.org.uk/news-insights/consolidation-solutions-for-db-pension-scheme-trustees/.
