The Pensions Regulator (TPR) will scrutinise all defined benefit (DB) superfunds looking to enter the market while the government develops a new authorisation system.
These funds will need to prove they are financially sustainable, well-governed and have a viable business model under new guidance issued by the regulator.
They must also demonstrate a "high probability of being able to pay members' benefits as they fall due" as TPR looks to identify, assess and mitigate all possible risks.
TPR's executive director of regulatory policy, analysis and advice, David Fairs, said DB superfunds could provide more security for members while driving up standards.
"However, as these schemes come to market, we need to give savers confidence these schemes are run by fit and proper people and are backed by adequate capital," he said.
"By coming to us now, superfunds can show how they plan to meet the standards we and government expect, and prevent possible regulatory action further down the line."
A government consultation into DB pension scheme consolidation, which opened last week, describes superfunds as potentially benefiting from improved funding, economies of scale and better governance.
A capital buffer could provide greater security for savers by protecting against risks of future employer insolvencies, and improve the likelihood of members being paid in full.
It also says superfunds can provide an alternative way for employers to separate themselves from legacy pension arrangements, allowing them to focus on the day-to-day running of their business.
KPMG pensions partner, Stewart Hastie, said superfunds could be the right solution for many schemes, but warned that authorisation may make them difficult to access.
"For example, a requirement to ensure a 99% success rate, compared with 99.5% in the insurance regime, may prove difficult to deliver at an affordable price point," he said.
But added: "We welcome the proposals for superfunds which means they can now be a reality. It gives the industry much needed clarity and we can expect some deals to complete by Q1 next year."
