In its response, the ABI suggests that allowing superfunds to operate for-profit consolidators under an “untested, light-touch regulatory regime risks playing retirement roulette with scheme member benefits.”
It says the regime would enable the private equity-backed funds to operate a lesser version of the gold-standard insurer buy-out market whilst circumventing the stringent Solvency II prudential regulation regime – creating regulatory loopholes.
The so-called superfunds that have already come to market publicly state that their intention is to only accept well-funded schemes.
The proposals, according to the ABI, seemingly “only help employers to walk away from their obligations to their employees on the cheap, rather than addressing the need to help under-funded schemes.”
Commenting on their consultation response, the ABI’s director of long-term savings and protection, Yvonne Braun, said: “These plans would lower the chance that millions of people will get their full pension at retirement, effectively putting them into a game of retirement roulette.
“They do nothing for those in the most poorly funded employer pension schemes, which was one of the key objectives of the original policy.”
She added: “In fact, they now only seem to help otherwise solvent employers who want to offload their pension liabilities on the cheap, and so-called superfunds, while creating huge uncertainty for millions of employees.
“The plans would also privatise gains with the superfunds and their shareholders and socialise losses, as failing superfunds would fall into the pension lifeboat.
“The plans need an urgent rethink.”