There will be "many flavours" of defined benefit (DB) consolidators but consolidation will only be the right answer for a minority of schemes, Alan Rubenstein says.
So far two new consolidators have emerged in the market following the Department for Work and Pensions' (DWP) white paper in March - The Pension Superfund, which was co-founded by Rubenstein, and Clara, the consolidator set up by Adam Saron and Kim Toker - but there are existing consolidators already operating in the market, including TPT Retirement Solutions.
Speaking at Lane Clark and Peacock's annual pensions conference on 18 September, the former chief executive of The Pension Superfund - who announced he was stepping down from his role earlier this month - said: "Of course we are yet to see what other models will emerge. Will this become a debate of models? Will we be competing with other models, and does it all become about price?"
Rubenstein noted the two entrants into the consolidation market have different operational models. Clara is a sectionalised occupational scheme seeking buyout solutions, while The Pension Superfund works on a scheme-to-scheme transfer basis, pooling assets and liabilities. Nonetheless, both share some common ground.
He explained that both funds are bringing private capital of roughly 10% of the assets, and both are "seeking to replace the sponsor covenant with a financial covenant and to remove the liability from the sponsor's balance sheet".
Rubenstein also said he believed that there is room for everyone to benefit from consolidation.
He explained: "For trustees it's likely to mean an immediate improvement in the funding level of the pension funds.
"For the member, it means there is no change to the pension promise. And if it is done right there will be an immediate improvement in their financial security."
Rubenstein further noted that proper safety guards must be put in place to make sure the fund is maintained, regulated and in the interest of scheme members but added "innovation like this should be encouraged, not feared".
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