Getting Ready for the Rise in DB Consolidation: Master Trusts and Superfunds Explained

The market now includes a mix of established and emerging providers such as TPT, Mercer, Isio, Citrus, abrdn, Cheviot, Deloitte, and Prudential, each offering different approaches to governance, sectionalisation, and service integration. While all seek stronger governance, scale, and lower costs, their structures vary considerably.

Some operate fully sectionalised (ring-fenced) models, where each employer’s assets and liabilities remain legally separate. These sections may invest through shared platforms or funds but retain individual investment and funding strategies, sharing access to investment vehicles rather than pooling assets. Others offer partially pooled models, where schemes opt into common funds or model portfolios to capture greater scale and efficiency while retaining strategic control.

Trusteeship also differs. Some providers allow existing trustee boards to continue within the Master Trust framework and even retain preferred advisers or administrators. Others move to a sole professional trustee model under the provider’s board, offering a centralised approach. This flexibility between control and full outsourcing is a key consideration for employers and trustees.

What is a Superfund?

Superfunds take consolidation a step further than Master Trusts, as they fully sever the link between a DB scheme and its sponsoring employer. Clara-Pensions remains the only Superfund formally approved by The Pensions Regulator (TPR), with its “bridge to buyout” model setting the benchmark for how these vehicles were expected to operate, a stopgap for schemes whose sponsors could no longer support them but weren’t yet ready for insurer buyout.

However, the market is shifting. On 9 October, TPT Retirement Solutions announced plans for a new run-on Superfund, with the potential for surplus sharing with members after five years. This could be judged to stretch the boundaries of what TPR’s current “gateway” tests were designed to assess. Those tests focus on member security and distressed sponsors, not on how surplus might be distributed once funding improves. The TPT vehicle aims to be the UK’s first TPR assessed superfund designed to run on and we think could prompt TPR to revisit how the gateway applies to a broader range of consolidation approaches, particularly those aimed at long-term run-on rather than short-term risk transfer.

The legislative backdrop and the road ahead

The Pension Schemes Bill (June 2025) formalises Superfund regulation, giving TPR powers to authorise and supervise consolidators’ capital, governance, and funding. While DB Master Trusts continue to operate under existing trust law, the Bill signals growing scrutiny of all consolidation routes.

Ultimately, DB Master Trusts could offer continuity and efficiency, while Superfunds could provide full sponsor exit and investor-backed security. The right choice depends on a number of different factors, including but not limited to covenant strength, funding position, long-term goals, and appetite for ongoing involvement. With regulation evolving to support both, the future of DB pensions may lie not in winding down but in scaling up.

At Pi Partnership we are working with both employers and trustee boards to review how these different governance frameworks may add value depending on the objectives of the pension scheme and the employer, alongside other options such as sole trusteeship and streamlined governance and adviser reviews.