David Walmsley: DB is certainly not dead – this is the moment where DB evolves, with better funding, better tools and better opportunities to serve member interests
The Pensions Regulator (TPR) expects three superfund applications over the coming year, with as many as six other players in early talks about entering the market.
Speaking at the Professional Pensions Endgame Summit on Wednesday (25 March), the watchdog's director of trusteeship, administration and defined benefit (DB) supervision David Walmsley said TPR was seeing real growth in the superfund market.
Currently, Clara is the only superfund in the market - a provider which completed its fourth transaction last June. TPT Retirement Solutions has also announced it is planning to launch a defined benefit (DB) superfund designed to support run-on.
Walmsley added all the providers that were currently in discussion with the regulator – including "half a dozen" players in early talks – had used the regulator's innovation service, which was launched last May.
He noted that all the different superfunds the regulator had been talking to had slightly different business models.
Walmsley said TPR welcomed the growth in the market. He said: "As a regulator, we want to see that market grow and the options come forward."
He added the Pension Schemes Bill is expected to provide statutory underpinning for superfunds – adding superfunds could, for some schemes, represent a viable long-term destination, offering a model where schemes "could transfer to larger, professionally governed vehicles with the aim of delivering improved outcomes".
But he said the regulator was also seeing other emerging and innovative models – and expected to see increasing amounts of them, driven by strong funding positions and evolving market dynamics.
Walmsley added that, while new products and services are emerging, the regulator continued to expect that trustees put members first.
He said: "Innovation is absolutely welcome, but it must be safe, evidence based and anchored in clear trustee accountability."
Walmsley said strengthened funding position, increasing numbers of endgame options and higher, clearer regulatory expectations meant that the industry was entering "a defining period for defined benefit (DB)".
He said: "This is not the end of DB, and DB is certainly not dead – this is the moment where DB evolves, with better funding, better tools and better opportunities to serve member interests.
"Our role as a regulator is to provide clarity and provide guardrails. Your role as trustees, advisers and employers is to navigate all those choices with professionalism and foresight. If we do that together, the next decade will not be remembered for the challenges of the past, but for embracing those opportunities ahead."
