Defined benefit (DB) pension superfund The Pension SuperFund (PSF) has been mothballed after three unsuccessful attempts to complete the assessment process, as first reported in the Financial Times and confirmed to Pensions Age.

According to the Financial Times, Disruptive Capital Finance founder and PSF partner and co-founder, Edi Truell, blamed The Pensions Regulator (TPR), government and insurance industry for making his DB superfund business model “uninvestable”.

Truell told the Financial Times he was “mothballing” the PSF after it had failed to complete the necessary assessment process to operate in the market.

He added that his decision was made after TPR had not produced ‘profit extraction’ guidance on how superfund investment profits could be distributed.

“We were promised there would be clarity on profit distributions by June at the latest,” Truell told the Financial Times.

“For that not to be forthcoming erodes trust in government and the regulator.”

Pensions Age understands that idea for the PSF has not been scrapped for good, and it is waiting for TPR to provide an update on further guidance to make the proposition investable.

The concerns around the lack of profit extraction guidance were also highlighted by PSF CEO, Luke Webster, in a recent Work and Pensions Committee hearing.

He stated: “Unfortunately, the updates to the guidance would fall in the camp of too little too late, from our perspective.

“The lack of clarity about being able to make distributions renders the proposal uninvestable at this stage. It is completely unreasonable I think for us to expect people to put their capital at risk without having any line of sight to how they might achieve a return on that.

“The pejorative language of profit extraction is enormously unhelpful too. We do not use that language in any other business context.”

Commenting in response to Truell and Webster’s comments, a TPR spokesperson said: "We have supported innovation by creating an interim superfunds regime, and recently revised our guidance to make it easier for schemes to transfer to a superfund.

“We're now considering how best to go forward on profit extraction, but our primary focus has to be ensuring that savers’ interests are protected.”

A Department for Work and Pensions spokesperson added: “The government remains committed to having a permanent regulated superfunds regime and will legislate as soon as parliamentary time allows.

“This will ensure we maintain momentum and cement the legacy of this important innovation.”

The PSF was first launched in 2018 and aimed to provide a Pension Protection Fund-eligible DB scheme under the existing occupational scheme framework, with the covenant of the employer replaced by covenant support from a capital buffer.

It would combine all incoming assets and liabilities and run them off in a single section.

Clara-Pensions, a rival DB superfund that completed the assessment process in 2021, has a different model that has a separate section for each incoming scheme, with each section than moved to an insurer when sufficiently funded.

Share Story: