Will superfunds come to the rescue of UK pensions?


Soaring high over the City, a new breed of corporate consolidators are preparing to swoop on our pensions.

Last month, UK regulators gave the green light for the creation of “pension superfunds” — commercially run entities capable of pooling final salary schemes from different employers and running them as one large fund.

With the first deals expected to be struck later this year, experts believe the path to consolidation could be hastened by the pandemic.

From an individual investor’s point of view, a final salary or defined benefit pension promises a secure and comfortable retirement. However, the generous lifetime benefits provided by legacy pension schemes are a significant liability for many UK companies and many are under pressure to pump in extra funding.

Offloading pension liabilities to a third-party may seem like an attractive long-term solution — but it also an expensive and tightly regulated market.

Written by Josephine Cumbo. Read the full article here