28 Jul 2020 Superfunds: Risk, Certainty, Capital and Value

The satisfactory resolution of the UK’s under-funded private-sector Defined Benefit pension schemes is a major long-term, yet increasingly pressing, topic for the UK government. And it is, of course, a subject of significant interest to the UK actuarial profession. Superfunds, which seek to consolidate DB pension funds and provide contingent capital to support them, have emerged as a potentially important element in the range of solutions to the DB pensions problem. Recent guidance published by The Pensions Regulator has provided some immediate clarity on what it requires of superfunds as they go about their business of consolidating DB pension funds.

This note discusses aspects of the TPR guidance from the perspective of actuarial methodology, and within the wider context of the economics of superfunds.