Regulator updates its superfunds guidance

The Regulator has published a blog in which it outlines the key areas where its guidance on DB superfunds has been updated to reflect the findings from the review conducted earlier this year. Also published is a response to the review, providing a summary of the key issues considered as part of the superfunds guidance review. 

Key changes to the superfunds guidance include:

• Changes to make it easier for schemes to transfer to a superfund and clarification of how the gateway criteria are met. These are that the scheme cannot access buy-out (and has no prospect of doing so in the near future), and that the transfer will improve members’ likelihood of receiving full benefits.
• Detail on aspects of the assessment and application process for transfer.
• A time limit of nine months between a scheme demonstrating capital adequacy and the transfer taking place.
• General clarification in light of feedback from stakeholders and the Regulator’s experience in operating the regime.
• An increased discount rate for use in the assumptions for calculating minimum technical provisions, allowing for market movements since the original guidance was issued.
• Changes to the Regulator’s funding expectations: amending the discount rate from Gilts+0.5% to Gilts+0.75% reflecting changes in the market but maintaining saver security as paramount.

In relation to extracting profit, and how this will work, the Regulator plans to issue a further update at some point.