First superfund to begin accepting transfers

TPR does not yet operate an authorisation regime bit its new online list shows the regulator has assessed qualifying superfunds and found they have met its standards across a range of criteria, including governance and adequate capital backing.

Clara Pensions is the first name to be added to the list, leading some experts to herald a “landmark day”.

Nicola Parish, TPR’s executive director of frontline regulation, said: “We welcome the first addition to our online list of DB superfunds. The list shows where superfunds have met our expectations and is a vital tool for trustees and employers who may be considering transferring to such a scheme.

“We are determined to protect savers and so potential customers of a superfund on our list can have the confidence that the scheme has been through a rigorous assessment process to show they are fit for purpose.”

However, she added: "We expect employers considering a superfund to come to us for clearance."

TPR has been operating an interim regime for superfunds since June last year, and published guidance in October 2020 for employers considering a transfer to a superfund. Under the interim regime, superfunds may approach TPR for assessment and, should they pass, they will be added to the online list.

Adam Saron, chief executive of Clara Pensions, said: “Today’s confirmation that Clara has completed TPR’s assessment process marks an incredibly important step forward in our journey to provide safer pensions.

"We now turn our attention to our first transactions and our first pension scheme members. We’d encourage trustees, employers and advisers considering consolidation to get in touch to discuss their options, as we plan our transactions for the coming year."

'A landmark day'

Iain Pearce, senior risk transfer consultant at Hymans Robertson, hailed a “landmark day in the history of DB pensions” as Clara’s successful assessment “opens up a new endgame option for schemes”.

“This will provide more options to protect members’ benefits, especially for those schemes where there are significant doubts about their ability to be able to insure benefits in full at some point,” he said. 

LCP’s head of corporate consulting, Gordon Watchorn, said the announcement signified a “red letter day” for pension schemes and their sponsors.

“After years of discussion and understandable caution from regulators, we should now see superfunds up and running and doing transactions in the coming months.

“There will clearly need to be careful ongoing regulation of superfunds to make sure they live up to their potential, but today’s announcement by TPR marks a major step forward in the world of pensions.” 

First transactions imminent

Pearce suggested the most likely candidates to be the first to transfer to a superfund “are already very well progressed and have been engaging with TPR for some time. 

“Therefore, we’d expect those first applications to be submitted very quickly, and we may see the first transfers finalised in 2022,” he said. 

However TPR reuires clearance for every case, which means its initial assessment is not the final hurdle.

"We expect TPR to closely scrutinise all cases, paying particularly close attention to the first movers. Indeed, TPR notes that a number of key factors of their assessment, such as capital adequacy, will not be considered in detail until clearance applications are made.”

John Baines, partner and head of commercial consolidation at Aon, concurred, saying the approval came “at the right time for trustees who are concerned about sponsor covenant, or for sponsors who need a cheaper solution to the ‘pensions problem’ than buyout,” especially following the impact of Covid-19.

“More widely, trustees and sponsors should consider using this market development to revisit their long-term strategy and assess whether superfunds are a viable endgame option for their scheme.”

Benjamin Mercer is a reporter at FTAdviser's sister publication Pensions Expert