Pension SuperFund to wind down after failing to secure regulatory authorisation

Edi Truell, founder of private equity group Disruptive Capital, is winding down the Pension SuperFund, a commercial pension consolidator, after failing to get regulatory approval for the business. According to the Financial Times, Truell said his decision came after Regulator failed to produce guidance on how profits generated by superfund investments could be distributed.

Luke Webster, chief executive officer of Pension SuperFund, is quoted as saying that the lack of regulatory guidance made the market “uninvestable” as there is no clear way in which an investor could expect to get their money back.

The Regulator published amendments to its superfund guidance last month, but left what was described as “an obvious gap” by not updating its stance on allowing superfunds to extract profits prior to securing members’ benefits with an insurer. A spokesperson for the Regulator said that it wanted to engage further with the pensions industry on how this would work and that an update would arrive in “due course”.

The Pension SuperFund was launched in 2018 having lined up £500m (€571m) largely from private equity firms and Truell’s family office. In 2020 it set up a new occupational pension scheme at the request of the Regulator for the benefit of the UK tax authority.

Unlike Clara, the only authorised superfund to date, the Pension SuperFund had not been given the green light to operate. According to the FT article, it had tried three times to get approval. Clara’s business model is to act as a “bridge” to buyout for pension schemes while the Pension SuperFund was out to administer pension benefits in perpetuity.

There is currently no legal framework for the regulation of superfunds. The Government consulted on the issue in 2019 but primary legislation is required to establish the regime. In the meantime, the Regulator has established an interim regulatory regime for assessing and supervising superfunds.

Steve Webb, partner at LCP and former Pensions Minister, praised the Regulator for “playing a blinder” but said that the lack of legal certainty was an issue for both trustees and investors.

The Regulator is due to engage further with the pensions industry on how to progress on profit extraction, but says that its primary focus is on ensuring that savers’ interests are protected.

A DWP spokesman said superfunds were an “important innovation” and that the Government “remains committed to having a permanent regulated superfunds regime and will legislate as soon as parliamentary time allows”.