Commenting on the Government’s response to the DWP’s consultation on the consolidation of DB pension schemes, Iain Pearce, Head of Alternative Risk Transfer, Hymans Robertson, said:

“It is good to see the Government moving to provide more clarity for the superfund regime to support decision making for providers and pension schemes alike and sees the clear potential for superfunds to play a part in the wider objectives to push to utilise capital in pension schemes to stimulate economic growth.

“The response demonstrates that there continues to be strong political support for superfunds. It appears eager to enable a wide range to develop - these could include sectionalised and non-sectionalised as well as both those aiming for buy-out and running on. In doing so, it confirms it is open in principle to models such as the Pension Superfund in addition to Clara-Pensions, which continues to be the only superfund that has completed the Pension Regulator’s assessment process.

“The Government has acknowledged that, in order for the Superfund market to develop and thrive, there is a need for a clear separation in terms of pricing that could be offered by superfunds compared to insurers. This indicates that the regime may support superfunds to be around 10% cheaper, in part due lower standard for security with a softening of minimum capital requirements.

“Providers will welcome the clear signposting of the preferred mechanism to allow returns to be extracted for capital providers, and trustees and sponsors will welcome the increased clarity on the advice requirement.”