I am sorry to read that after sinking “the best part of £50m” of his and his family’s money into Pension Superfund , Edi Truell is moth-balling the project. Government delays have real consequences for those who have responded positively to initiatives. Truell was an entrepreneur who followed an invitation to put forward a commercial consolidator in 2016. 7 years later and 5 years after a consultation on how to make this project a reality, we are no closer to getting a superfund off the ground.
Superfunds are occupational pension schemes which take a long term view on investment and can invest in the kind of long-term-assets that the Treasury and DWP promoted in their Mansion House reforms. The returns from these assets should enable superfunds to quote lower prices for consolidation than insurers do for buy-out. Those providing the operations and capital support for superfunds share in any upside with members. As with any other occupational scheme, the PPF stands behind the superfunds.
The news will please the PRA and Bank of England who earlier this month were stating their opposition to what has been called “buy out on the cheap”. Yvonne Braun – at the same session of the Work and Pensions Committee commented that superfunds were all but dead. Seldom can the ABI’s lobbying been so successful.
In an interview with Jo Cumbo of the FT, Truell said
“We were promised there would be clarity on profit distributions by June at the latest, for that not to be forthcoming erodes trust in government and the regulator.”
Truell’s number two, Luke Webster added
the lack of regulatory guidance made the market “uninvestable”. Were you running a pension superfund today, there would be no line of sight for an investor as to how they might get their money back.”
The Mansion House reforms saw the development of superfunds as a key plank in the Government’s plans to promote the investment by pension schemes into “long-term assets” that provided productive finance to British industry. Truell, who set up the system of pooling of assets in LGPS , has been a founding father of such an approach. LGPS is the main fund investing in such assets but the Government hopes that not just superfunds but large DC schemes and the few remaining corporate DB plans will follow suit.
Truell and Webster have now run out of patience with a regulatory process that seems incapable of working with commercial providers. Though Clara has been approved as a superfund for two years, it has yet to do a deal and finds itself similarly stymied by regulations that give it neither deals nor a commercial prospect of delivering a return to shareholders.
It is a sad reflection on the gap between policy intent and regulatory incompetence that 7 years after superfunds were put forward by the DWP, its regulator has still to get to first base in their regulation. Nausicaa Delfas, the new CEO at the regulator now has the job of explaining just what her “new mindset” amounts to in practice.
She will be speaking at the PLSA conference next month in Manchester and should expect some difficult questions on why the Government’s agenda has been set back by a failure from her teams to deliver.
Having met with Edi Truell a few times, I have no doubt that he is beaten yet. I fully expect him to bounce back and repurpose his pension superfund to deliver another way. He, Luke Webster and the substantial team he has built have stated their intention to buy STM , an AIM listed financial conglomerate incorporating an authorised master trust, a number of other vehicles that collectively manage over £7bn of assets.
Truell has made it clear that he intends to use his considerable muscle to right some of the wrongs that have been done to those mistreated by the financial services industry. There is hope for progressive pensions here – and for the Mansion House reforms.