Revised superfund regulations – Good news for your new funding code valuation?
9 April 2026
With the new Defined Benefit Funding Code now in force, trustees and sponsors are grappling with exactly what ‘acceptable’ funding looks like in practice (especially for those schemes not intending to comply using the Fast Track route). Meanwhile, The Pensions Regulator has quietly updated the assumptions underpinning the UK’s emerging superfund regime. John Ingoe explores how these two developments may combine to offer a useful steer for schemes approaching their next valuation.
How might the revised superfund regulations spell good news for your next scheme valuation under the new funding code?
Your immediate answer to the above question might well be “What on earth are you talking about?”
Bear with me though. I do have a point to make (and I think it’s a good one).
Before I get there, a bit of background…
New funding code – What has changed?
Actuarial valuations with effective dates from September 2024 have been subject to The Pensions Regulator’s (TPR) new Defined Benefit (DB) funding code. Under that code, there are two routes of compliance: Fast Track and Bespoke.
Under the Fast-Track approach, schemes must meet criteria set out by TPR around assumptions, recovery plan length and investment strategy. A key requirement is that the discount rate must be no higher than ‘gilts + 0.5% pa’ by the time the scheme reaches significant maturity (which is, broadly, when the weighted average term of future benefit payments is 10 years or less).
Schemes that do not meet these criteria must take the Bespoke route to compliance. This will involve providing more information to justify the approach adopted. An increased level of scrutiny comes with using the Bespoke route, but TPR has explicitly stated that Bespoke compliance is every bit as valid as Fast Track compliance.
The one big question that we cannot answer right now is exactly what approach TPR will accept under the Bespoke route.
This will likely be decided on a case-by-case basis. Once the code has been in place a while longer, and more valuations have been submitted, we will have a clearer idea of TPR’s acceptable boundaries. But at this early stage, we do not.
Superfunds – Changes to the regulatory regime
First of all, a quick reminder of what a DB superfund is. At its heart, a superfund is a vehicle that provides an alternative to an insurer buy-out (i.e. another option that can remove the responsibility for paying member benefits from the sponsor – for a price).
There are different superfund models being developed, from the shorter-term ‘bridge to buy-out’ used by Clara to a longer-term run-off model. At the time of writing, Clara is the only operational superfund so far in the UK.
As the market develops, TPR expects different operational and governance models to emerge. And so, in order to protect member benefits, TPR has created a regulatory regime that applies across all superfunds. A key part of this regime is the required level of member security a superfund must provide, along with the assumptions used to calculate the minimum level of technical provisions.
The latest guidance from TPR, issued in January 2026, sets out these requirements in detail and makes changes to the assumptions used to calculate technical provisions. It remains the case that superfunds must provide a capital buffer sufficient to provide a 99% probability that members’ benefits remain fully funded over five years. But the basis on which the technical provisions must be funded has changed – with the required discount rate moving from ‘gilts + 0.75% pa’ to ‘gilts + 1% pa’.
It’s this change that has potential implications for funding valuations.
Back to your valuation – we finally get to the point
While there’s no explicit link between the new funding code and the superfund regulations, they are both fundamentally designed to do the same thing – protect member benefits.
And, in my opinion, this shared objective, protecting member benefits, means that we can infer what TPR might consider a reasonable approach to funding under the new DB funding code by looking at the superfund regulations.
Surely, if a scheme can demonstrate that it provides a similar level of security for member benefits as a superfund, then it’s reasonable to expect that the scheme should not have to fund more prudently than a superfund does.
Not every scheme will be able to demonstrate that level of security, but some will, and others may be able to put in place arrangements that achieve it. You could argue that a contingent asset – or even an extremely strong employer covenant – could provide a similar level of security as the capital buffer in place for a superfund.
So, if you are the trustee or sponsor of a scheme considering your funding strategy, I believe that this gives a clear steer that ‘gilts + 0.5% pa’ is not the only acceptable answer.
And if that’s not the case, and TPR is unwilling to accept a discount rate of ‘gilts + 1% pa’ where there is sufficient security for member benefits, that could raise some uncomfortable questions about consistency.