Clara-Pensions has agreed its latest superfund transaction with the Church Mission Society and the Trustee of the CMS Pension Scheme, making it the UK’s fourth DB Superfund transaction.
The agreement means that 730 members of the Scheme and £55 million in assets will transfer to Clara’s management. Scheme members will continue to receive their full pension entitlements, with the transaction backed by significant financial contributions from both CMS and Clara.
The deal is the first to use a ‘connected covenant’ structure and the first involving a not-for-profit employer. The structure allows a continuing contingent guarantee from the original sponsor, in this case, CMS, alongside Clara’s capital commitment, providing an additional layer of long-term security for members.
Clara was advised by legal firm Cameron McKenna Nabarro Olswang, continues to be backed by global investment firm Sixth Street and was supported by Heywood Pensions Technologies. The Clara Trustee is supported by Hymans Robertson, Van Lanschot Kempen, and Eversheds Sutherland. Hymans Robertson provided the advice to CMS, which also received legal advice from Gunnercooke. The Trustee of the Scheme was advised by Barnett Waddingham and Burges Salmon.
Clara-Pensions chief transactions officer Matt Wilmington says: “This marks Clara’s fourth transaction and a landmark for the not-for-profit sector. We’re proud to support the Church Mission Society in securing the long-term future of its members’ pensions, while enabling the organisation to refocus on its core charitable purpose. This transfer is not only the first involving a charity, but also the first to use a connected covenant structure – an important new layer of protection for members. With a strong and growing pipeline that includes several other charitable schemes, we are proving that Clara is accessible to all types of sponsors, regardless of sector.”
Capital Cranfield professional trustee and CMS Pension Scheme chair of trustee board Richard Hubbard says: “This is really good news for our members. As trustees we are focused on our duty to ensure pensions are paid, and this transaction means our members’ pensions are more secure. The new arrangement benefits from significant financial commitments from both CMS and Clara, in addition to the ‘connected covenant’ which means our members retain the long-term protection of our existing security package. With the Clara Trustee taking over our responsibilities in a seamless manner, we are confident our members are in good hands. I have been impressed with how all the parties worked together, and would like to pass on my thanks to all the advisors for their collegiate behaviours.”
Church Mission Society chief executive officer Alastair Bateman says: “Church Mission Society is deeply committed to the wellbeing of our employees past, present and future and so I, and the rest of the senior leadership team, are pleased to be able to take this important step towards ensuring the security of our mission partner and staff pensions.”
Barnett Waddingham principal and senior risk transfer consultant Jack Sharman says: “We’re delighted to have led the advice on this groundbreaking transaction and to have delivered a solution that meets everyone’s objectives.
“The CMS Scheme is a longstanding client of BW, and we have worked collaboratively with the Trustee and sponsor over many years to improve the scheme’s security. It’s therefore extremely pleasing to have completed this journey by putting members on a clear path towards a full buy-out.
“We’re particularly proud to have demonstrated that superfund transactions can be accessed even by smaller schemes in the not-for-profit sector, which can face unique challenges. This, together with the innovative new covenant structure for this transaction, means that it is an exciting time to find new solutions in the pension risk transfer space.”
