The Consolidator Conundrum
As defined benefit (DB) pension schemes mature and become better funded, they are increasingly considering various different end-game approaches.
We propose three questions a trustee board should ask when considering a consolidator; these correspond to the three pillars of our decision-making framework. The first two relate to the potential improvement in support and likelihood of receiving benefits. The third seeks to understand the future sustainability of the consolidators business.
In previous papers, we have explored new developments in ways of thinking about pension scheme risk in end-game and on the incorporation of sponsor covenant risk. Consolidators introduce another dimension to end-game pension scheme management. Despite some regulatory uncertainty, there is a possibility that many trustees will find themselves facing the following question: When might a consolidator be right for my scheme?
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