This post is worth unpacking as the Edmund (Edi) Truell has committed getting on for £50m of his hard earned capital to improving the funding of UK pensions, both in terms of quantity and quality
Much needed
If Britain is to consolidate defined benefit pension schemes, it will need consolidators. Right now there is only one and it is but a “bridge to buy-out”, The PPF want to become a consolidator but have no plans to do so till 2026. The Pension Superfund, Truell’s chosen vehicle, is not approved and therein lies a tale. We need superfunds to consolidate
For underfunded schemes
DB schemes that are still underfunded have never been so close to meeting technical provisions and if their sponsor can find a way to fix funding, Truell can find a way to fix solvency with a capital backed journey plan. It really is a case of buy now while high yields last.
Weak sponsors
Many well run companies are weak because of the demands of their DB pension scheme. The demands of trustees , fuelled by the funding lust of TPR, has meant many otherwise solvent companies are teetering. A second sponsor is required, Truell is at hand.
A long-term run off superfund
If we are serious about the quality of the funding , we need funds that can take a 50 year view. For all Clara’s brilliance, she is taking a 5-10 year view, severely restricting their capacity to deploy patient capital.
Harnessing savings into long-term assets
Truell is an entrepreneur whose portfolio of companies he sponsors include
From insurance to cables that carry steam under oceans, the businesses his capital funds deliver a positive social impact. Deployed through his long term assets vehicle, he is putting his money where his mouth is.
At least as well capitalised as insurance
Truell should know, he founded Pension Insurance Corporation and is still a major shareholder. The capital requirements needed to meet the Pension Regulator’s prescription for capital backed journeys and superfunds are met by his Pension Superfund.
Shovelling risk off to Bermuda
If you buy an annuity, whether you are a trustee or an individual, you are as likely to have your money being insured by a reinsurer in a tax-haven than by the London markets. The days of UK insurers taking their own risk are long-gone and with them the commensurate security. Just what are British insurers doing to back Britain?
A risky plan?
The Daily Telegraph’s headline suggests that backing Britain is a risky business. I hope it is. Without the capacity to take risk, Britain has little chance of turning round its dismal lack of productivity. Without investment in long-term capital, the businesses that our innovators are founding today, have little prospect of being an ARM tomorrrow.
There is nothing wrong in taking risk if you are a long-term investor and you are rewarded for taking it, We all know what lockdown meant.
Enter the superfund
It is high time we recognised our entrepreneurs, especially the very few entrepreneurs who work with pensions.
Edi Truell is a national treasure who deserves a lot better treatment than he or his superfund have been getting.