DB superfunds

Defined benefit (DB) consolidation is the idea of pooling various elements of managing a DB pension scheme (eg liabilities, investments, actuarial services) to create economies of scale and reduce risk. There are multiple models of DB consolidation. One of these models is a DB superfund (also known as a DB consolidator).

A DB superfund is a vehicle into which the DB liabilities of multiple DB schemes can be transferred to secure their members’ benefits, resulting in the severance of the employers’ liability towards the transferring schemes. Instead of an employer covenant, the DB superfund benefits from a capital buffer which can be called on if the DB superfund needs it.

For further information, see Practice Note: DB consolidation—what are DB superfunds?