UK Pension Transfer Market: Why DB Superfunds Are Worth Watching

Insurance buy-out, where an insurer takes on a defined benefit (DB) scheme’s liabilities in full and the sponsoring employer exits the risk, is one well-known way to reach an endgame. It is not the only route under discussion. TPT Retirement Solutions, for one, has a run-on superfund in the works, and when The Pensions Regulator (TPR) announced its 2026 Annual Funding Statement, its Executive Director of Market Oversight, Ben Gunnee, named “run-on, superfund consolidation, buyout” as routes that trustees and employers may be weighing.

This article looks at one of them, the superfund, and at signs that this part of the UK pensions market is starting to broaden.

A Superfund Market That Is Starting to Broaden

Superfunds, which take on DB scheme liabilities from their original corporate sponsors, are not new to the UK. Since TPR completed its assessment of Clara-Pensions in late 2021, Clara has been the only superfund on TPR’s list of assessed providers, and it is built as a bridge to insurance buy-out.

LCP argued in May that 2026 is set to be a “pivotal year” for the sector, pointing to greater regulatory clarity, increased competition and a wider range of schemes able to meet TPR’s criteria for a superfund transfer. The consultancy said it understands that three further providers are in, or heading into, TPR’s assessment process, which could take the market from Clara as the sole provider to four. It also expects other providers in that process to look at run-on models and value-sharing mechanisms.

What the Funding Numbers Show

TPR’s announcement of its 2026 Annual Funding Statement reports that around 90% of schemes are in surplus on a technical provisions basis, 80% on a TPR-derived low dependency basis and 60% on a buy-out basis, based on TPR’s estimates as at 31 December 2025. The same schemes score very differently depending on the yardstick, and that matters to a sponsor: a scheme can be in surplus on one measure and still fall short on another, and TPR itself cautions that funding positions vary significantly between individual schemes.

The roughly 20-point gap between the low dependency and buy-out estimates is one place a superfund conversation could arise, although TPR’s figures do not themselves measure demand for superfunds.

Where TPT’s Plans Fit

TPT’s run-on superfund is intended to hold schemes for the long term instead of serving only as a stepping stone to buy-out, and TPT says it aims to share surplus with members. TPT says it has secured the capital for its first £1bn to £1.5bn of transactions. The vehicle is still being developed and must pass the regulator’s assessment first, and TPT’s current timeline projects that it should be ready for first transactions in Q1 2027.

TPT describes superfunds as an additional endgame solution for schemes that are not yet ready for insurance buy-out or want to de-risk sooner, and says they are particularly suitable for schemes without large surplus funding positions that cannot afford alternatives such as a full buy-out. LCP expects other providers in the assessment process to look at run-on and value-sharing approaches too, which suggests TPT’s proposition may be one of several rather than a one-off. That depends on assessments that have not yet concluded.

What This Means for Sponsors and Trustees

For sponsors and trustees, a wider range of superfund models would add to the endgame options on the table, particularly for schemes that fall short of buy-out funding. Under TPR’s current interim regime, TPT’s summary of the gateway test shows what trustees have to establish: that buy-out is not affordable now, is not likely in the foreseeable future, and that a superfund improves the likelihood of members receiving full benefits.

That test is due to change. The Pension Schemes Act 2026, which received Royal Assent on 29 April 2026, provides for a permanent statutory regime, expected to apply from 2028, in which, according to Norton Rose Fulbright’s summary, the conditions for transferring are set at a lower threshold, with detail still to come in secondary legislation.

For advisers and consultants, more providers moving through assessment would change the due diligence conversation. Rather than a simple “superfund or not”, clients may have a genuine choice between competing models to compare, once those assessments conclude.

None of this is settled. TPT’s own vehicle has yet to clear TPR’s assessment, and TPR has said that being on its list of assessed superfunds is no guarantee that a particular transfer will be cleared, and that trustees must still carry out their own due diligence. A broader range of superfund models is arguably worth watching, but that is an interpretation of where the market may be heading rather than a confirmed outcome.