You can read the press release from TPT about the £1bn launch being planned.
I have worked with Edi Truell and know his intentions were to share returns from the Pension Superfund he wanted to launch with members. Sadly this did not happen, his two applications to launch a superfund did not happen, the third attempt- Pension SuperHaven – which could have offered a “pot to pension” retail version did not happen either. It is hard to launch a product without the secondary legislation fully in place and the Pension Scheme Road Map tells potential Superfunds that they will have to wait till 2029 to get that.
This is a shame, one superfund in 10 years of trying is not a great success rate. Clara is to superfunds what Royal Mail is to CDC, a brave precursor (we hope).
The Pension Trust (TPT) is talking about a more ambitious superfund than Clara, Clara is looking to be a bridge to buy out and funds that become part of it expect to see themselves insured within a decade. The vision of David Lane, the CEO of TPT has a longer scope.
This is from Mary McDougall’s article
“The plan is to use the surplus that arises from running the superfund to augment member benefits”
said David Lane, chief executive at TPT.
The group plans to submit its proposal to the pensions regulator for assessment in January.
Lane said the amount shared with members would depend on a range of factors — including a scheme’s funding level on entering the superfund and investment performance — but that over a 25-year period
“the majority of the surplus would accrue to the members”.
Mary McDougall in the FT adds that David Lane..
added that schemes that planned to run on “clearly have a different risk profile” than those that are a bridge to buyout. But these also take a longer-term view that could fit with the government’s ambition to boost investment in UK companies.
I have received this comment which is from an instigator of much of the DWP’s thinking on Superfunds.
Thoughts from Andy Young
The news from TPT is very interesting. I really hope they succeed where Pension Superfund failed. It will be interesting to see if PSF come back into play, perhaps once it is clear when capital can be returned to investors on a run on model.
I don’t know anything about TPT and their ideas other than what is public. And on what is almost precisely the 10th anniversary of my first meeting on Superfunds (if we ignore all the similar action around 2005 or so) and indeed around the 30th anniversary of the Central Discontinuance Fund idea, I am interested to see how it develops. A few initial reactions.
A. It is a bit late, but better late than never. The funding changes post 2022 have dramatically shifted the schemes in the neat square table I used to review of funding level v sponsor strength/weakness and what that implied for the potential market and how that could be expected to move over 5 years or so.
B. The Gateway tests, both formal and from trustees, still seem daunting. Comparing insurer/FSCS v Superfund/PPF is as much an exercise of FSCS v PPF than what to me is a lot of pretty spurious tail event modelling. But I have never been a trustee.
D. The run on v bridge to buy out seems fuzzier than the words imply. Clara looks to me to have to run on past reaching buyout funding in order to make a return to investors, at least for those schemes which didn’t come with capital to inject into the buffer outside the scheme. If I am correct it will be interesting to see when they do buyout. The same issue of course applies to any scheme running on past buyout. TPT will probably not run on until the last widow dies if they know anything of the American Civil War pension experience. So it is the length of the bridge issue.
E. I will be very interested to see if TPT sectionalises its scheme or not. Lots of issues in my head on that.
F. I will be very interested to see how TPT balances the role of the scheme trustees and whoever represents the interests of TPT and its investors.
G. I will be very interested in its pricing/funding/investment proposition.
Some thoughts of my own
I wish TPT luck in this. There is a proportion of the DB market that would rather not see members insured in a buy-out any time soon and will welcome an alternative to soldiering on , on their own. Trustees and employers committed to an invested solution for their members may have a scheme to join after all.
My heart goes out to Edi Truell for all the work he has put, to get nowhere, my hand is proffered to David Lane’s.
TPT have made it clear they would like to offer a CDC plan for ongoing savings and a means for DC savers to decumulate collectively (as they did in the early years of DB when the Pensions Trust was getting going.
All is not black and white, M&G (who were Prudential) are looking at elements of the with-profits approach to an insured solution, I spent last Friday afternoon with them , they work closely with John Quinlivan, a long-term friend to this blog and Pension PlayPen. It seems to me that there is some movement following the Pension Schemes Bill’s enthusiasm for Pension Superfunds. That will be long overdue.
