Consultancy group Willis Towers Watson (WTW) has launched a defined benefit (DB) scheme management service that could provide pension funds with a means to joining a “superfund” consolidator once the regulatory and legislative framework is approved.
The OneDB service, launched this week, bundles together WTW’s administration, actuarial and investment services for UK schemes.
Under the terms of OneDB, trustees and scheme sponsors will remain in place with a lead adviser from WTW overseeing administration, actuarial decisions and investments. OneDB will also advise schemes on how to become fully funded.
“What we’re increasingly finding is that trustees have a really complicated job to achieve,” said Gareth Strange, head of OneDB.
“Many trustees are facing increased investment complexity and stronger governance requirements… and corporate sponsors are trying to find a solution to the strain of weighty DB legacies on their balance sheets, so we’ve identified the need for a much simpler solution.”
Strange emphasised that OneDB was not a commercial consolidator – or superfund – similar to those proposed recently by the Pension SuperFund and Clara Pensions.
“It is a step below that,” he said “We are simply bringing together an actuarial solution, an investment solution and an administration solution – all under the Willis Towers Watson banner – but schemes still retain the same corporate sponsor and the same trustees.”
When it launched in March this year, the Pension SuperFund said it aimed to scoop up £500bn in DB assets. Reports earlier this month suggested the SuperFund was close to signing its first £10m scheme transfer.
While questions remain over the final make-up of a regulatory framework for the new consolidators, under current Pension Regulator rules, schemes such as WTW’s OneDB do not require regulatory approval.
However, once the new rules are in place, Strange said WTW had yet to decide whether OneDB would eventually morph into becoming a commercial consolidator.
“When the regulatory regime is announced it is difficult to say how the market will develop and it is difficult to say whether we – or any other retirement benefits consultant – will move into that commercial consolidated space.”
WTW and other investment consultants are currently the focus of an investigation by the Competition and Markets Authority (CMA). However, Strange said the process and its outcomes were unlikely to impact the new service.
“Consolidation is a really hot topic right now,” he said. “And from the perspective of trustees looking to improve efficiency, we felt that having a solution like this at the time was more important than waiting for the CMA and the regulations on commercial consolidators.”