Flexible Apportionment Arrangements (FAA) being used to transfer pension scheme liabilities to an asset manager is “frankly unfair”, Clara Pensions CEO, Simon True, has said.

Speaking at Pensions UK’s Annual Conference, True stated that “anything that improves member outcomes is great”, but that there has to be a level playing field.

He highlighted how The Pensions Regulator (TPR) spent years creating a superfund framework and assessment process that was “robust”.

This framework means that consolidating pension schemes has to operate within certain parameters, True said.

“You have to be accountable for what you do, you have to report on what you do. There is a benefit to that, where you can have a better regulatory regime with fewer people who are under a lot more scrutiny. And they report regularly and they have triggers to protect members. That makes absolute sense to me. To be able to sidestep that, with a device that was not created for that purpose, feels very unfair,” he explained.

“I don’t have the scars on my back personally from going through TPR assessment, but my colleagues do, and I feel it’s frankly unfair that the process they had to go through isn’t being asked of others,” he added.

“If someone has deep enough pockets and are genuinely making a difference to members, in principle it is right. But let’s just have a little of bit of commonality around the scrutiny and accountability that superfunds have to go through.”

In June, the government announced plans to review FAA regulations following the landmark transfer of the Stagecoach Group Pension Scheme (SGPS) to Aberdeen.

In a statement, Pensions Minister, Torsten Bell, confirmed that the Department for Work and Pensions intends to consult on whether existing FAA regulations should be strengthened after a "novel use" of the mechanism enabled the asset manager to assume responsibility for the liabilities and assets of a DB pension scheme.

The transaction, completed in December 2025, saw a first-of-its-kind deal, with Aberdeen replacing Stagecoach as SGPS’ sponsoring employer for the scheme’s 22,000 members.

Under the deal, Aberdeen will take on responsibility for scheme’s funding and the management of around £1.2bn in assets.

However, the scheme, which is in significant surplus, will continue to ‘run-on’ under Aberdeen’s sponsorship – a model that both parties say offers a more sustainable long-term solution than insurance buyout for well-funded schemes.

The transaction includes robust guardrails designed to protect the scheme’s financial security, while enabling the trustee to allocate part of the surplus directly to members.

As part of the initial uplift, members will receive a 1.5 per cent increase to all benefits, alongside improved inflation protection through higher caps. In total, more than £50m of surplus will be allocated to members immediately, with the potential for further increases over time.

Aberdeen will receive a minority share of any future distributed surplus, with the majority reserved for members.

At the time, the deal was hailed as a significant development in the DB market, with supporters arguing it could provide an alternative route for well-funded schemes seeking improved member outcomes and long-term security.

However, Bell noted that although the transaction complied with existing legislation, it was undertaken in a manner not envisaged when FAAs were introduced in 2012.

"We therefore intend to review this area of legislation to ensure the regulatory standards and safeguards evolve and keep pace with the innovation we are seeing in the pension market," he said.

Bell added that the review would consider whether additional protections were needed where mechanisms such as FAAs were used in ways that involve the commercial operation of DB pension schemes.

The minister pointed to the Pension Schemes Act 2026, which introduced a statutory framework for DB superfunds, noting that the legislation included safeguards to ensure that the interests of commercial operators align with those of scheme members.

"This contrast highlights the importance of considering whether additional safeguards are required where other mechanisms, such as FAAs, are used in ways that similarly involve the commercial operation of DB pension schemes," he continued. "We will therefore consult in due course on whether and how existing FAA regulations could be strengthened."

Bell emphasised that the government wanted to support innovation that could improve member outcomes, but argued that regulatory frameworks must evolve alongside new business models.

"Where providers are looking to run schemes for profit, this can work in scheme members' interests but regulatory standards and safeguards must evolve to match the new risks this creates," he stressed.

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