What is a Superfund?
A superfund is a commercial consolidation vehicle for Defined Benefit (DB) pension schemes. It provides an additional endgame solution for schemes that are not yet ready for insurance buy-out or want to de-risk sooner.
When a scheme transfers to a superfund, the link with the sponsoring employer is severed. The scheme’s assets, along with a possible top-up from the employer and additional risk capital from investors, are pooled within the superfund. This capital buffer replaces the traditional employer covenant, providing security for members’ benefits.
Superfunds invest these assets to meet pension liabilities and aim to generate returns for risk capital investors. They are subject to regulatory oversight and must meet strict gateway criteria set by The Pensions Regulator (TPR), ensuring that transfers are in members’ best interests.
Greater choice and benefits
In some models, superfunds can act as a bridge to buy-out. TPT’s Superfund aims to offer surplus sharing with members, delivering uplifted benefits instead of transferring value to an insurer.
Superfunds bring greater choice to the consolidation market. As funding levels have improved for many schemes, superfunds offer a practical route for those not fully funded for buy-out. Currently, four out of five UK DB schemes are in surplus, with an aggregate funding level of 120% on a technical provisions basis*.
Run-on superfunds are well positioned to invest in growth assets, supporting the UK Government’s economic ambitions.
* Defined Benefit Pensions Schemes: Government Response (from TPR data 27 January 2025)
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Is a superfund right for your scheme?
Superfunds are designed to take on the obligation of meeting the liabilities of schemes from their original sponsors. They are particularly suitable for schemes that don’t have large surplus funding positions and cannot afford alternatives such as a full buy-out with an insurer.
TPR has set out a gateway test to help schemes assess eligibility for a superfund transfer, designed to ensure member outcomes are protected and improved.
- Buy-out isn’t affordable now
- Buy-out isn’t likely within the foreseeable future
- A superfund improves the likelihood of full benefits being paid
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 which 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.
Consolidation options for schemes not yet ready
For schemes not ready for a superfund due to funding levels, data quality, or other challenges, we offer consolidation options to support the journey toward endgame readiness – discover DB Multi-Trust.
Sparked your interest?
If you’re considering your scheme’s endgame options or want to learn more about superfunds and consolidation, get in touch:
Why choose TPT?
Our mission is to make pension schemes perform better for everyone, from trustees and employers to the members who have pension savings with us.
We're pension specialists
Pensions are all that we do. We understand them and have learned, over many years, what it takes to manage them effectively. Our teams know pensions inside and out, so you and your members don't have to, and we've invested time and money into developing the best possible systems and processes.
We're owned by a pension fund
We're owned by a pension fund, which gives us a thorough understanding of the pensions landscape and its complex regulations.
We keep things simple
TPT have the experience of working with traditional final salary schemes, through to more complicated arrangements. Our teams have the experience and confidence to understand your scheme and work with you to make it perform better for everyone. You'll always have an input into the running of your scheme, and we'll keep our discussions as clear and simple as you need them to be. With both DB Master Trust and DB Multi-Trust, your investment strategy will be aligned with an appropriate and flexible long-term target.
We're responsible investors
We provide cost-efficient investments for our employers and members, using an approach that's supported by market-leading investment strategies and a long-standing commitment to responsible investing.
It's not only the right way to work, but also an essential part of recognising financial risks and opportunities. We implement environmental, social and governance policies to secure the best outcomes, and actively engage in industry initiatives to help make a difference.
We're future focused
We manage pension schemes based on knowledge and insight, so that they can achieve better outcomes now and in the future. For the things we can't always predict, like market turbulence or new legislation, we have a long track record of adapting and innovating. It's what makes us one of today's leading pension providers and helps us to futureproof your pension scheme.
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