Zarah ChoudharySuperfunds have come of age, according to Hymans Robertson, as completed deals over the past two years have helped to build understanding and confidence for future transactions.
The report argued that opinions have shifted from widespread scepticism, to superfunds being widely viewed as a valuable addition to the pensions market.
With future transactions expected to lead to interest from potential new providers, The Pensions Regulator (TPR) will hold a key role in responding to changing market dynamics, according to the consultancy.
TPR will operate within the future superfund legislation to regulate this market, but the balance between regulation and supporting innovation must be maintained, the firm warned.
Iain Pearce, head of alternative risk transfer solutions at Hymans Robertson said: “As superfund transactions become more common, we anticipate more schemes to view these as an attractive option.
“This could drive a positive feedback loop that could result in additional superfunds entering this market in the years ahead.
“As the market changes, it would be remiss of us not to expect some teething issues with how new regimes are developed and applied.
“Endgame decisions can be complex.
“In our view, the tests laid out by TPR are a blunt tool and may not always be an accurate barometer for assessing the suitability of schemes to enter a superfund transaction.
“We expect an evolution of how these tests are conducted to ensure that these do not become a blocker when a superfund transaction would be a positive outcome for members.
“This would enable greater freedom for Trustees to choose their preferred DB endgame in line with their fiduciary duty.
“Overall, the success story of superfunds might just pave the way for more to follow in its path.
“We look forward to helping schemes if they choose to travel down this road to secure better and more secure futures for their members.”
