TPT Retirement Solutions has announced plans to launch a defined benefit (DB) superfund designed to support run-on, having already secured capital to fund the first £1bn of transactions.
 
If TPT's proposed new consolidation vehicle passes The Pensions Regulator's (TPR) assessment, it would become TPT’s sixth pension scheme consolidation proposition, building on the group's plans to launch multi-employer collective defined contribution (CDC) schemes and the launch of its income for life default DC retirement product

TPT noted that both TPR and the Department for Work and Pensions (DWP) have expressed their support for superfunds, which offer schemes an alternative endgame solution, taking on the obligation of meeting the liabilities of corporate DB pension schemes from their original sponsors.

However, there is only one superfund that has been assessed by TPR in the UK market currently, and it targets buyout as its end goal. 

TPT's superfund proposition, designed to run-on, is therefore intended to help broaden the range of endgame solutions available to employers and trustees. 

The group also confirmed that it has secured capital to fund the first £1bn of transactions, which it anticipates will be sufficient to support several deals subject to scale, regulatory approval and market conditions.

The new superfund was designed with members’ interests at the core, with a specific focus on increasing the likelihood that members receive full benefits, with distributions to members from the surplus from year five onwards, increasing to the majority of the surplus once the risk capital has been returned to the investor.

To support this, TPT’s superfund will be established with an independent Trustee Board and full-time executive team.

Commenting on the news, TPT Retirement Solutions chief commercial officer, Nicholas Clapp, said: “We’re very excited to announce our plans to launch a superfund that targets run on rather than a bridge to buyout.

"There is a real opportunity here, and our intention to launch a superfund forms part of a broader ambition to offer a full suite of consolidation options to schemes to suit their bespoke needs.

Adding to this, TPT Retirement Solutions CEO, David Lane, said: “At TPT, we believe consolidation vehicles such as this provide better outcomes for members.

"They benefit from economies of scale supporting TPR’s ambitions for fewer, larger, well-run schemes which provide better value for money.

"By design, superfunds also come with big pools of capital for investment – the creation of which aligns closely with the Government’s ambitions for economic growth.”
 
The news has also been welcomed more broadly, as LCP head of DB consolidation, Laura Amin, highlighted the news as a "very significant announcement, widening the options for schemes and adding further momentum to the growth in the superfund market".
 
“It’s encouraging to see the increased choice and flexibility for pension schemes with TPT’s model supporting long-term run on rather than acting as a bridge to buyout – and with the potential for surplus sharing with members after 5 years," she stated.

"We expect that we will see further new entrants come to market over the coming year, with further innovation in the models (including on the use of surplus), which will act as key differentiators for trustees.”

LCP head of not-for-profit, Richard Soldan, said that the news will be particularly relevant to charities and other employers that already have schemes run by TPT – potentially offering a new option to help them settle their pension liabilities at a more manageable cost.

Hymans Robertson head of alternative risk transfer, Richard Wellard, also welcomed the plans, pointing out that the proposed offering differs to other superfund transactions to date, "so it is good to see the innovation in the development of the superfund market".
 
“With the TPT superfund hoping to be open for business soon, we expect the prospect of using future surplus for member augmentations will be interesting and appealing to a wide variety of pension schemes," he continued.

"This will also provide healthy competition into the superfund market. It’ll be more important than ever for schemes and sponsors to fully understand the range of options available to them in a fast-changing landscape.”

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