DB superfunds must reach ‘high bar’ to receive TPR endorsement

Defined benefit (DB) superfunds will have to reach a “high bar” to win regulatory endorsement and the confidence of savers, according to a blog post from The Pensions Regulator (TPR).

The blog post, written by TPR executive director of frontline regulation, Nicola Parish, was published as the regulator released a series of 'gateway principles' in new guidance for trustees and sponsoring employers of DB pension schemes considering a transfer to a superfund.

TPR’s blog post said it would publish the names of superfunds on its website when they have demonstrated they have met the high bar set by the regulator’s guidance and expectations.

Parish explained: “Trustees who think a preferable outcome for members is a transfer to a superfund should only consider transferring to a superfund that we have assessed and concluded meets our expectations. And to be clear, consideration of transferring to a superfund should only be considered if a full insured buyout for full member benefits is not feasible in the near future.”

After superfunds have been found to meet TPR guidelines and expectations, the regulator intends to continue supervising them to ensure that they “demonstrate the ongoing application of our guidance and other regulatory requirements”.

The blog post argued that trustees must take a wide range of issues into consideration when considering transferring their scheme to a DB superfund, including understanding what members might be gaining by transferring and what they might be giving up.

Parish continued: “Choosing to transfer is a big decision. Trustees and employers should take professional advice, work together and contact us as soon as possible to discuss if they are considering transferring to a superfund.

“Consideration will need to be given to a wide range of issues including ensuring a robust process of due diligence, the strength of the covenant supporting the scheme, trustee and employer duties and powers, and the transfer process. A trustee should consider the level of knowledge on their board and may consider appointing an independent trustee to support them on the journey.”

The blog also gave extra details of TPR’s plans when it came to evaluating individual transfers, stating that the regulator will consider both the transferring scheme’s and the superfund destination’s readiness for the transfer.

Parish stated: “Aside from looking at how it could affect the scheme we will also consider the possible impact on the superfund itself. For example, if it is a very large scheme, is the superfund demonstrating the preparedness to be able to cope with the increased demand on its resources?”

    Share Story:

Recent Stories


Responsible investing
Laura Blows speaks to Standard Life head of investment solutions, Gareth Trainor, about the latest responsible investment trends and developments for providers, pension schemes and their members
ESG and member engagement
Laura Blows speaks to Legal &General Investment Management head of DC, Emma Douglas, and Nest Insight Director of Research and Innovation, Jo Phillips, about member attitudes towards ESG and how this may impact upon pension fund investments