XPS Pensions Group has welcomed a proposed consultation from the Department for Work and Pensions (DWP) on DB pension scheme consolidation.
The firm says it “will hopefully lead to a defined framework in which consolidators can operate.”
 
XPS says consolidation will not and should not be “the new goal for all pension schemes,” and said it is “unlikely to be attractive for schemes which have very strong sponsor support, or which have a clear plan to buy out.”

But the firm says some schemes “will be able to improve the security of their members’ benefits by transferring their liabilities to a consolidator.”



Consolidators are also likely to be better placed to run schemes more efficiently when these are combined to achieve sufficient scale, XPS claimed.
 
Martin Hunter, principal at XPS Pensions Group, said: “Consolidation is a great example of horses for courses.

“The pension scheme with a ‘stallion’ of a sponsoring employer may choose to run their own race, continuing to rely on the support of their employer to help them pay benefits over time.

“Or a scheme with a funding level at the front of the herd may feel there is no need to settle for anything less than full insurance protection for their members and opt to buy out.

“But for some schemes the option of consolidation should be a real front-runner.”
 
Colette Christiansen, head of de-risking solutions at XPS Pensions Group, said: “We strongly believe that schemes should be encouraged to pursue options that are right for them.

“Each scheme has a unique set of circumstances and there are schemes for which the consolidator market is the optimal solution.

“We welcome the introduction of a defined framework for consolidators to operate in so that this market can grow effectively helping to secure pensions for members.”