The Trades Union Congress has questioned the emergence of pension superfunds that aim to offer employers a cheaper way of providing pensions.
Usually a firm wanting to offload its scheme pays an insurer to take on the risk but organisations are entering the market that want to do this service more cheaply.
In March a defined benefit consolidator called Pension SuperFund, run by former Pension Protection Fund chief executive Alan Rubenstein, was launched.
It intendeds to acquire about £20bn of business over the following five years from companies wanting to remove pension liabilities from their books.
But the TUC is worried the superfunds could pool assets from DB schemes in a way that could be detrimental to members.
Speaking to the Financial Times, TUC policy officer Tim Sharp says: “There is a good case for consolidation in cases where schemes are poorly governed and funded. But these consolidation funds are targeting the better funded schemes with good sponsoring employers.”
He adds: “We are hearing a lot of talk about how these consolidators can help employers but not a lot about consulting members over whether cutting a link with an employer and moving into one of these untested vehicles is in their best interests.”