Bank of England sceptical about pension superfunds

Plans for “pension superfunds”, cleared by industry regulators in recent weeks, could pose a threat to financial stability.

Plans for “pension superfunds”, cleared by industry regulators in recent weeks, could pose a threat to financial stability, according to Andrew Bailey, governor of the Bank of England.

Pensions specialists have spent more than two years working on the concept of pension superfunds, through which a number of large defined-benefit pension schemes could be consolidated into one scheme. 

They argue that where employers are looking to offload their defined benefit pension liabilities – a popular option with firms keen to manage risk and costs – superfunds could offer a better alternative for members and scheme sponsors than working with an insurer, which is currently the only option.

Pension superfunds were effectively given the go-ahead last month by the Pensions Regulator, which published new rules governing how such arrangements could work, including protections for members. 

But while the regulation won the backing of pensions minister Guy Opperman, the Bank of England is understood to have significant concerns. Bailey reportedly believes that the regulation proposed is not robust enough to protect the scheme’s members – and that if a large pension superfund sector develops, this could become a systemic risk.

Recommended

What tightening Covid rules mean for your money
Investment strategy

What tightening Covid rules mean for your money

The government has introduced new rules to slow the spread of Covid. John Stepek looks at what they could mean for the markets, interest rates, and yo…
9 Dec 2021
NFTs: what are they and why are they so popular?
Bitcoin & crypto

NFTs: what are they and why are they so popular?

The NFT market has been on a rollercoaster ride in 2021 starting with the $69m sale of a digital artwork backed by a cryptographic token known as an “…
8 Dec 2021
We’re at another turning point in the 100-year cycle of money – here’s what to do
Currencies

We’re at another turning point in the 100-year cycle of money – here’s what to do

Money has always moved in 100-year cycles. And we’re at another turning point now, says Dominic Frisby – money has gone from gold to government-backed…
8 Dec 2021
I wish I knew what a bond was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what a bond was, but I’m too embarrassed to ask

When thinking of investing many people automatically think of the stockmarket. But there is another market – the bond market. So what exactly is a bon…
7 Dec 2021

Most Popular

Three safe bets on the growing online gambling sector
Share tips

Three safe bets on the growing online gambling sector

Professional investor Aaron Fischer, creator of the Fischer Sports Betting and iGaming ETF, picks three of his favourite online gambling stocks.
29 Nov 2021
Making sense of the new minimum pension age rules
Pensions

Making sense of the new minimum pension age rules

The rules surrounding the minimum age at which you can start tapping into your retirement savings have been tweaked, but are still confusing. David Pr…
23 Nov 2021
Bubbles grow in global property markets as house prices continue to rise
Property

Bubbles grow in global property markets as house prices continue to rise

House prices grew by 6% in the year to mid-2021 in 25 global cities, with the German property market in particular showing signs of overheating.
3 Dec 2021