PLSA AC 2020: TPR to publish DB superfund guidance to trustees next week

The Pensions Regulator (TPR) will publish further guidance to pension schemes considering transferring to a defined benefit (DB) superfund, next week.

Speaking at the PLSA Annual Conference 2020, TPR executive director for regulatory policy, analysis and advice, David Fairs, said the expanded guidance would set out the regulator's expectations of what trustees need to take account of when considering moving to a superfund.

"We are expanding on our guidance to trustees, we are publishing this in the course of next week," Fairs stated.

"That will set out our expectations of the things that trustees need to take account of and the extent to which they can rely on the due diligence that we have carried out through the assessment process, so that they can know exactly what they need to take into account."

Fairs noted that part of the challenge in producing the guidance was ensuring that it was clearly set out what trustees should bear in mind when considering moving to a DB superfund.

He also said the regulator has tried to make the guidance "proportionate", as small schemes will not be able to have "endless budgets" that they can spend investigating whether a superfund is right for them.

The regulator had also seen products entering the market that were "really not that different" to superfunds, and it wanted to "put down a marker" that people promoting those structures were aware that they may be subject to the same regime and guidance.

"In particular, if trustees and employers are going into those structures and there’s an insolvency of the employer and there’s a special purpose vehicle in place, then they could get caught by our interim guidance," Fairs continued.

"So what we are saying is the promoters of those structures, trustees, and employers need to understand circumstances in which they might be subject to our interim guidance and think about the consequences of an employer insolvency, our guidance applying and what that means in terms of members’ benefits."

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