Clara-Pensions has become the first defined benefits (DB) superfund to complete The Pensions Regulator's (TRP) assessment process of a  new 'superfund' consolidation vehicle. 

The funding code requires trustees of defined benefits (DB) pension schemes to think even more carefully about their "long-term objectives", which is often assumed to involve either: 

  • targeting a “buy-in” or “buyout” transaction with an insurance company; or
  • achieving full funding on a “low dependency” basis.

However, entry into a superfund would provide an alternative route. Recent guidance suggests these could offer enhanced security for schemes that may not be able to afford an insurance transaction. 

With Clara and PSF currently leading the charge, other potential entrants to the commercial consolidation market may now begin announcing their propositions. Yet assessing whether or not a superfund is the right destination for a given scheme is unlikely to be an easy decision. 

This briefing note (updated in December 2021 to reflect recent developments) covers:

  • the background to consolidation
  • the current superfund providers and what they offer
  • the risks
  • the schemes likely to pursue consolidation
  • and what’s next

As we wait for the final 'authorisation' regime for superfunds to be formalised in primary legislation, it remains important that trustees and sponsors weigh up all options on how to achieve their long-term objectives, taking legal, actuarial and covenant advice as necessary. 

DB superfunds - the new consolidation option

Recently, the Pensions Regulator published the eagerly-awaited details of the interim regime for superfunds. In our recent blog, we explore what the new rules will mean for Clara and PSF, and any other new entrants into the market.

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