FORTHCOMING DEVELOPMENT 1: On 11 July 2023 the Department for Work and Pensions (DWP) published its response to its consultation on ‘Consolidation of Defined Benefit Schemes’, which was originally published on 7 December 2018 and had sought views on how defined benefit (DB) superfunds would operate.
The vast majority of the consultation responses were supportive of the DWP’s proposals but, while there was broad agreement that robust authorisation and ongoing regulatory oversight were needed, opinion was divided on what form these should take. The majority of respondents from the pensions industry argued that the risks DB superfunds present are best controlled by a strengthened pensions regime, while the majority of respondents from the insurance sector wanted an insurance-based regime, with some suggesting levels of security that would only be marginally below the existing insurance buy-out regime.
In response, the DWP considers that a DB superfund is an occupational pension scheme and believes that it would simply be recreating insurance if superfunds were required to adopt Solvency II capital requirements in their entirety. The regime the DWP is therefore proposing is designed to ensure that members
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