The Trustee of the Wates Pension Fund and Wates Group have agreed on transferring DB members to Clara Pensions.
The transfer includes 1,500 members and £210m of scheme assets and is expected to be completed in January 2025.
Wates will invest around £19m but has contributed more than £75m into the Fund over the last eight years. Clara Pensions will also provide additional capital.
The Trustee and Wates received advice from actuarial, legal and covenant experts at PwC, LCP, Cardano, Macfarlanes and CMS. Meanwhile, the Pensions Regulator provided regulatory clearance for the transfer to Clara.
Wates Pension Fund chair of trustee Mike Roberts says: “This is a very positive development, providing increased security for members’ benefits. Throughout this process, we have seen the care and commitment Clara has for its members. This, coupled with the additional funding secured from Wates Group and Clara as part of the transfer, has been key to our decision-making.
“We are confident that, with the transfer to Clara, members’ benefits will be more secure and, in the future, move to an insurance company sooner than if they remained in the Fund.”
Wates Group chief executive officer Eoghan O’Lionaird says: “Wates continually reviews its pension provisions, working closely with the Wates Trustee as part of our joint commitment to protect the interests and benefits of members and their dependents.
“Wates has always delivered on its commitments to the Fund and this has led us to the strong funding position we find ourselves in today.
“Following a rigorous decision-making process with the Trustee, we’ve identified an opportunity to further improve the security of our members’ benefits. This is important to Wates, especially given the challenges of both an uncertain economy and market conditions.
“We are pleased to be able to facilitate a transfer to Clara with a £19m contribution to the Fund, along with funding from Clara, giving our members greater security for the future.”
PwC head of superfunds Amy Hemmett says: “We are delighted to have advised Wates on this important transaction which provides enhanced security for the members of the Wates Pension Fund, both now and for the future.
“This transfer to Clara allows members to benefit from the innovation in end-game solutions whilst removing the risks associated with managing defined benefit schemes in the current regulatory environment.
“This transaction demonstrates the growing importance of superfunds in the UK pensions landscape, offering the potential for better long-term outcomes for pension scheme members.”
LCP risk transfer partner Sam Jenkins says: “It has been a pleasure leading the advice to the Trustee on this landmark transaction. It required advice on multiple workstreams concurrently and was made possible by careful planning and collaborative working between all parties. The end result is a robust commercial agreement with Clara that provides a secure home for members’ benefits and a bridge to insurance in the future. It is also extremely pleasing to see this transaction expand the range of credible ‘end-game’ options for pension schemes and their sponsors.”
Hymans Robertson head of pensions policy innovation Calum Cooper says: “Clara is a rare pocket of member first innovation in the Defined Benefit landscape. This, their third transaction, is different. Here is another industry first. A first to exchange a commercial covenant for a more valuable financial covenant. This sets out a pathway for others to follow. Born of purpose, patience and relentless member-first persistence, Clara has already transformed the later-life finances of tens of thousands of current and future pensioners.
“As the Clara Pensions Trust Scheme Actuary, it’s been a huge privilege to go on the journey with Clara since 2017. This feels like the end of the beginning. For members of DB schemes looking to increase the level and the security of their pensions, the best is yet to come.”
Hymans Robertson head of alternative risk transfer Iain Pearce says: “We welcome this development of this third Clara transaction. It’s another important step forward in giving sponsors and trustees the range of solutions they need to deliver the benefits due to members of this pension scheme.
“Superfunds have the potential to play an important role in our industry and have the ability to create significant value for stakeholders. They can be the preferred option in many different scenarios and are not only relevant for schemes with distressed or insolvent sponsors. As this transaction demonstrates, superfund transfers can be a positive step for all involved, and certainly shouldn’t be viewed as a sign of failure.
“This transaction also demonstrates the changing perception of superfunds. There’s a positive feedback loop now that the market is gaining momentum, with each deal building confidence and strengthening deal pipeline for providers. We still expect some bumps in the road, given the market is still in its infancy, but it now seems likely that this market will move into a new phase of growth.”
