Clara-Pensions has taken on its first scheme, with the transfer of the £600m Sears Retail Pension Scheme.
This is the first time a DB scheme has transferred into a so-called superfund. Clara-Pensions will now be responsible for delivering the pensions promised to almost 10,000 former workers at Miss Selfridge, Warehouse and Wallis shops.
The transfer has received regulatory approval from The Pension Regulator (TPR).
In his recent Mansion House speech the Chancellor signalled support for DB superfunds as a way of providing consolidation and scale in the pensions market and helping to support investment into productive finance.
Clara’s chief executive Simon True said members would benefit from this transaction, describing it as “a landmark day”.
He adds: “Insurance [buyout] remains the gold standard for any pension scheme member but not all schemes can afford to reach that goal. Clara was created to provide a safe bridge that brings the insurance market into reach for more schemes.”
He said the company was in discussion with a number of other DB schemes with assets of £4bn.
Clara was founded 2017 and received preliminary approval to do deals from TPR in 2021. It has financial backing from a US investment firm. It is now the only superfund with regulatory approval and capital to take on schemes after a rival, Pension Superfund, was apparently closed earlier this year.
TPR’s executive director of frontline regulation Nicola Parish says: “We are delighted that we have been able to support the first ever pension scheme transferring into a DB superfund.
“Superfunds can offer increased security, improved governance and better risk management which means that pension savers are more likely to get their promised benefit. We want to see fewer, larger, well-run pension schemes and are pleased to see the market innovate and consolidate in savers’ interests.”
Aon partner Andrew Grime adds: “This is extremely welcome news to schemes which have been exploring superfunds as a potential destination. The journey to this first transaction was long and challenging with many regulatory, financial and practical hurdles to overcome. Clara will hope that the certainty this transaction brings can help pave the way for other suitable schemes to follow.”
LCP senior consultant Dev Gandhi says: “This transaction not only marks a significant milestone for Clara, but has the potential to be the catalyst for transformative change in the pensions industry. We estimate that there could be £5bn or more of further superfund transactions in the next few years and expect to see new providers and similar solutions entering the market, driving yet more innovation and competition in this space.”