The defined benefit (DB) pension superfund market is set for a pivotal year, with several key factors meaning that 2026 will prove to be a turning point for the sector, LCP has argued.

These factors included greater regulatory clarity, increased competition, and a broader range of schemes able to meet The Pensions Regulator’s (TPR) criteria for a superfund transfer.

LCP noted that recent statements from TPR confirmed it expected three providers to submit for regulatory assessment by the end of the year.

This would increase the number of superfund providers from Clara Pensions as the sole provider to a market of four superfund providers.

The consultancy said that new entrants were likely to come to market with alternative models to Clara’s bridge to buyout.

It pointed to TPT, which is in TPR assessment for a run-on superfund that would share surplus with members.

LCP expected other providers in assessment to be looking at run-on models and value-sharing mechanisms.

This expansion will create a more competitive superfund market, which LCP said could result in improved pricing, with the consultancy expecting to see superfund providers also seeking to differentiate themselves on non-pricing factors, such as member experience.

Additionally, incoming superfund regulations could result in capital requirements that are more efficient for providers, the consultancy noted, while the Pension Schemes Act could broaden the range of schemes able to construct a viable case for superfund transfer.

“We are seeing several supply side and demand side factors come together for 2026 to be a pivotal year for the superfund market,” commented LCP partner and head of DB consolidation, Laura Amin.

“On the supply side, we understand that TPR has confirmed that three superfund providers are in assessment so we may have four providers by the end of the year, creating a more competitive environment and expanding choice for sponsors and trustees.

“On the demand side, the expected relaxation of the gateway tests and interaction with surplus regulations will widen the range of schemes able to construct a viable case for superfund transfer.

“It will be fascinating to see how further innovation in the superfund and wider endgame market – for example in value share propositions - may extend the range of endgame options available for sponsors and trustees and deliver improved member outcomes.”

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