L&G plans product to rival superfunds

Legal & General (L&G) is planning to launch a product aimed at rivalling pension superfunds in the defined benefit scheme consolidation market.

Speaking to Reuters, L&G retirement institutional CEO, Laura Mason, said that the firm was already talking to employers and regulators about its planned product, which would look to provide an option for schemes that may not be able to afford a buyout.

Although L&G did not disclose when the product would launch, Mason said that it would be aimed at pension schemes with a “medium” level of funding.

She also said that L&G’s product would be regulated by the Prudential Regulation Authority, while the regulator the other two DB superfunds will have is still undecided, but it is expected to be The Pensions Regulator.

The firm hopes to challenge DB pension superfunds Clara-Pensions and The Pension SuperFund in the DB consolidation market and said that the L&G product would be similar to the other consolidators, but it would not totally split the pension scheme from its sponsoring employer.

DB consolidators are currently waiting for operating regulations to be completed by the government before they can properly enter the market. Although there is regulation for them to start business, there is yet to be any specific legislation for DB consolidators.

The Pension SuperFund has reportedly agreed two DB consolidation deals, the most recent of which was for £300m of liabilities but is still subject to regulatory approval. Its first deal was approved in May 2019.

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