Thursday 18 June 2020 8:55 am

Pensions watchdog gives go-ahead to superfund deals

The UK’s pension watchdog has given the green light to the launch of superfunds, leading to billions of pounds of retirement funds to be pooled together.

The Pensions Regulator (TPR) has set out an interim framework for supervising the pension consolidation vehicles called superfunds. Sky News first reported the development yesterday afternoon, before TPR confirmed.

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TPR said the regulatory regime is “to ensure clear rules are in place as these models emerge.”

The vehicles aim to collect together several corporate pension schemes. Proponents say it will mean they are run more cheaply and efficiently than the companies that set them up, but they have faced obstacles in gaining regulatory approval.

The pension superfunds have stalled due to concerns from the Treasury and the Prudential Regulation Authority that consolidation could be unfair competition for the insurance industry.

However, an agreement was reportedly reached following talks between TPR, the Department for Work and Pensions and the Treasury, according to Sky. But a permanent regulatory framework would likely require legislation and may take some time.

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Among those to be authorised will be Clara-Pensions and Pension Superfund. Clara’s model is expected to act as a bridge by taking on pension schemes before selling them onto specialist insurers within a decade, according to Sky. Earlier this year it was revealed that Clara was in talks about securing new capital from investors.

Pension Superfund’s chief executive Luke Webster said: “The framework which has been handed down today strikes a tough but sensible and sustainable balance which meets the needs of scheme members, the sponsoring employer, The Superfund investors and the wider economy, including enabling us into invest in the UK’s long term infrastructure.”

Potential candidates for the superfunds could include Thomas Cook, which collapsed last autumn, and department store chain Debenhams.

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Minister for pensions Guy Opperman said: “Well-run superfunds have the potential to deliver more secure retirement incomes for workers, while allowing employers to concentrate on what they do best – running their businesses.”

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