Many schemes are actively thinking about defined benefit (DB) consolidation and are waiting in the wings for the superfunds to prove themselves before engaging, Clara says.
Scheme advisers have reported to the consolidator that they have had numerous conversations with trustee boards that are considering taking the step, but want to see how early deals play out first.
Speaking to PP, chief executive Adam Saron said that once "the regulator has said ‘yes' twice", there will be a "sudden push".
"We have a shadow pipeline that we don't know about," he added. "We speak with advisers and professional trustees who say, ‘it comes up a lot in conversations with our clients' that they are looking at this actively.
"We always thought the opportunity was huge but it feels bigger earlier than we ever could have imagined."
The DB consolidation market is yet to land its first completed deal while both Clara and competitor The Pension Superfund voluntarily await regulatory approval, which is pending as the government considers an authorisation, supervision, and solvency regime.
It had been hoped such a framework would appear in the Queen's Speech last week, but pensions and financial inclusion minister Guy Opperman has recently suggested no legislative rules will appear before a government consultation response is published. This is expected around Christmas.
In the meantime, improvements in funding levels have been bolstering the bulk annuity market with 2019 already a record-breaking year and almost £35bn of deals having been confirmed.
Saron recognised this was possibly eating into the consolidator's potential pipeline, with it focusing primarily on schemes funded to a level between full funding on a technical provisions basis, and below on a buyout basis.
But he was cognisant that this was not a "client missed" but a "client that's ended up in the right place". As long as trustees make the decision early, it means there has been no wasted resource by either party.
However, with this year's market dominated by £1bn-plus transactions, he was concerned that some schemes were being "left behind".
"The average transaction size in the buyout market has doubled," he said.
With insurers seemingly focusing on larger deals, Saron said this presents an opportunity for Clara to help those smaller schemes unable to gain a foothold in the bulk annuity market.
The consolidator's plan is to run a sectionalised scheme and then move schemes to the buyout market at the earliest point possible. If it has lots of small sections that are ready to go to buyout individually, it will seek to bundle those together to make the potential deal more attractive to insurers, Saron said.
