The first new defined benefit consolidation vehicle (DB superfund) to meet The Pensions Regulator’s (TPR) tough governance and administration standards to protect savers has been added to a new online list.
The Pensions Regulator has confirmed that Clara-Pensions has successfully completed the defined benefit consolidator assessment process.
Clara is the first consolidator to achieve this milestone. Clara’s model, governance structure, key personnel, and financial sustainability were all evaluated by the Pensions Regulator, among other things. Clara can now begin to provide safer pensions to members, provide a secure solution to ceding trustees and ceding sponsors, and open up investment opportunities by consolidating assets as a result of this process.
The list includes any superfund that has been assessed by TPR and has demonstrated, through robust evidence, that it meets several criteria, including good governance, being run by capable people, and that it is backed by adequate capital.
TPR executive director of frontline regulation Nicola Parish says: “We welcome the first addition to our online list of DB superfunds. The list shows where superfunds have met our expectations and is a vital tool for trustees and employers who may be considering transferring to such a scheme.
“We are determined to protect savers, and so potential customers of a superfund on our list can have the confidence that the scheme has been through a rigorous assessment process to show they are fit for purpose. It is vital, however, that trustees and employers still carry out their own thorough due diligence to ensure they are confident a superfund is the right option for their particular scheme and members and only consider a superfund that is on our list. We expect employers considering a superfund to come to us for clearance.”
“We now turn our attention to our first transactions and our first pension scheme members. We’d encourage trustees, employers and advisers considering consolidation to get in touch to discuss their options as we plan our transactions for the coming year.”
Clara Pension Trust chair Alan Pickering says: “Today’s decision is one to be welcomed. It is good news not just for Clara but also for the whole pensions sector. Our role as trustees is to ensure that Clara remains member-first and offers safer pensions. We’ve been closely involved in engagement with The Pensions Regulator to demonstrate the strength of our role and that member interests are at the heart of the Clara model. We look forward to providing better outcomes for members as we welcome them to Clara.”
Clara-Pensions Group chair Lawrence Churchill says: “This is a strong vote of confidence in both our model and the consolidation idea. It’s good news for pension scheme members, confirming consolidation as a safe way to improve pension outcomes. Clara’s solution allows companies to focus on running their businesses with their pension schemes in safe hands. Crucially, for many schemes exiting PPF assessment, it may now be unnecessary to reduce promised member benefits when they wind up. This is a great day for the security of members’ pensions.”
In June 2020, TPR launched its interim regime for superfunds and other new models ahead of proposed government legislation. TPR then published guidance for trustees and employers considering a transfer to a superfund in October 2020.
Superfunds can request that TPR evaluate them, and if they meet TPR’s standards, they will be added to TPR’s list.