TPT Retirement Solutions is planning to launch a defined benefit superfund designed to run on that will distribute some surplus to members. The provider says it has secured capital to fund the first £1bn of transactions*.  

TPT’s proposed superfund still needs to get the green light from the Pensions Regulator. The firm’s offer would run schemes on, rather than lead them to an insurance buyout – the model that the only market participant to date, Clara Pensions, has adopted. The sole DB run-on consolidator that tried to enter the market, the Pension SuperFund, failed to get positively assessed by TPR and eventually left the market.

DB superfunds will be legislated for in the latest pension schemes bill, more than seven years after the government first consulted on a regulatory framework for consolidators, and the regulator recently issued guidance on options for DB schemes.

The case for DB superfunds has weakened compared with 2018, since most schemes are now funded to a level that allows them to seek an insurance transaction instead, but TPT said there are still schemes that fall short of full buyout funding. 

“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,” said chief executive David Lane.  

The new superfund, which will have its own full-time executive team and trustee board, will aim to increase the likelihood that members receive full benefits, TPT said. It plans to make distributions to members from the surplus from year five onwards, increasing to majority of surplus once the risk capital has been returned to the investor.  

TPT, which currently runs both a DC master trust and DB schemes, has been seeking to diversify its offering in recent months. In May, the firm revealed that it intends to develop a multi-employer collective defined contribution proposition, followed by the June launch of a new retirement income product announced two years earlier. In 2023, it also entered the fiduciary and consulting market.  
   

TPT's planned entrance into the superfund space comes as the bulk annuity market continues to attract record numbers of schemes. New research by insurer Standard Life suggests 48% of DB schemes aim for buyout, with 40% of these planning to approach an insurer in the next 12 months. A snap poll at an event by consultancy XPS Group on Wednesday showed 38% of attendees representing DB schemes aim to move to buy-in or buyout as soon as possible, but slightly more (41%) intend to explore run-on options. A fifth were still undecided. 

 
   

     

   

*This article has been updated for greater clarity