TPT Retirement Solutions plans to launch a superfund for defined benefit (DB) pension schemes to support those that wish to run on rather than move to an insurer.
The £11bn pension provider said in a press release this morning that it had already secured capital to back £1bn worth of transactions for the new superfund “subject to scale, regulatory approval and market conditions”.
The Pension Schemes Bill, currently going through parliament, contains primary legislation setting out how superfunds can operate. Clara Pensions is the only superfund currently operating and has taken on four schemes so far, and markets itself as a ‘bridge to buyout’.
TPT said its planned offering was designed to help pension schemes run on rather than target an insurance transaction, and would “broaden the range of endgame solutions available to employers and trustees”.
Nicholas Clapp, chief commercial officer at TPT Retirement Solutions, 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 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.”
David Lane, chief executive officer at TPT Retirement Solutions, added: “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 that 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.”
How TPT’s superfund offering will work
While the majority of DB pension schemes are in surplus, TPT said many were still falling short of the funding level required to afford a bulk annuity, meaning superfunds could help secure schemes’ longer-term future.
By targeting run-on, TPT said it would also contribute to the government’s aim of attracting more pension scheme assets into private markets.
“There is 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.”
Nicholas Clapp, TPT
TPT now plans to begin recruiting for a trustee board and full-time executive team to oversee the superfund. Investment will be handled by TPT’s fiduciary management subsidiary, which also manages money for the company’s defined contribution (DC) and defined benefit master trusts.
The company said the superfund aimed to “increase the likelihood that members receive full benefits”, and would target additional distributions to members from any surplus from year five onwards. This would increase to the “majority of surplus once the risk capital has been returned to the investor”.
The superfund concept typically involves DB pension schemes transferring to a consolidator vehicle and severing the link to the employer covenant, although Clara’s most recent deal with the Church Mission Society Pension Scheme involved the retention of a “connected covenant”.
TPT has expanded its operations substantially in the past couple of years. In May, it announced plans to launch a multi-employer collective defined contribution pension scheme to sit alongside its existing DB and DC schemes, and has recently launched an “income for life” product to serve DC funds in the decumulation phase.
The company opened its fiduciary management business, TPT Investment Management, to other DB pension schemes in September 2023. It has since added fixed income strategies and other asset class options, including alternatives.
