Regulator releases guidance on £170bn pension ‘superfunds’

The Pensions Regulator (TPR) has published new guidance for trustees and employers on transferring to defined benefit (DB) ‘superfunds’, with PwC research suggesting 1 million pension scheme members and £170bn of assets could follow suit in the next ten years.

Research carried out by the firm revealed that about 600 of the around 5,400 defined benefit pension schemes could pass the Department of Work and Pensions’ (DWP) three ‘gateway principles’ and be sufficiently well funded to transfer to a superfund over the next ten years.

This equates to around £170bn of pension scheme assets or about 10% of the total UK DB pension scheme universe.

These particular superfunds provide employers a way to consolidate existing schemes, by replacing the sponsoring employer with a capital-backed vehicle or a special purpose vehicle, creating a large retirement savings fund.

Nicola Parish, TPR’s executive director of Frontline Regulation, said: “Following the launch of our interim regime for superfunds in June, we are now providing further details about our expectations of employers and trustees who may be considering the significant step of transferring to a superfund.

“We know that some employers and trustees are keen to explore whether a superfund could provide another option for their DB scheme and for employers allow them to focus on future sustainability.”

She added: “However, while we await government legislation, we are determined to protect savers who may be moved into a superfund by rigorously assessing providers and then supervising them closely.

“Trustees need to ensure they are confident a superfund is the right option for their members, the transaction meets the gateway principles and only consider using a superfund named on the TPR website.”


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