Long-heralded defined benefit consolidators have yet to win a single client, but the prospect of mass insolvencies on the horizon could force trustees to test new derisking solutions. Two vehicles so far, The Pension SuperFund and Clara Pensions, currently operating under an interim regime, are awaiting final approval from the Pensions Regulator. Neither fund has yet transacted a deal after years of work, but consultants now see the threat of insolvencies as an imperative for trustees to make progress.

With the release of TPR’s interim regime, momentum does look to be building behind the DB consolidation sector. A third operator is understood to be waiting in the wings, insurers are busily developing competing products, and Finnish insurer Sampo has recently been revealed as a backer of The Pension SuperFund.

However, most trustees will hold off until the market is established, and worries remain over the lack of covenant in the consolidator model.

Jane Kola commented: “The best thing all schemes can do is get their house in order by sorting out their benefits. Get the benefit specification drafted and legally signed off properly, and transfer your data into buyout standard quality.”

“Then you are ready to move to buyout or a consolidator quickly depending on how your sponsor fares.”

“By all means, keep a close eye on covenant and seek to improve funding as fast as your sponsor can manage. But to fail to be buyout-ready on the benefits side is like Nero fiddling as Rome burns.”

Read Jane’s comments in Pensions Expert.