First Clara transaction could catalyse £5bn of superfund transactions over the next few years

Clara has today announced that it has completed the pension industry’s first superfund transaction, about two years after becoming the first and (currently) only superfund to successfully complete The Pension Regulator’s assessment process.

This landmark transaction with the Sears Retail Pension Scheme covers the benefits of c. 9,600 pension scheme members. It means that all pensions are now projected to be secured in full.

As highlighted by the transaction, the superfund model can enhance the support provided to members’ benefits, as it provides additional layers of protection. In this case, the Sears Retail Pension Scheme had material illiquid asset holdings, but with Clara was able to avoid the potential losses from selling these assets quickly which may have been incurred under a typical buy-in or buy-out insurance transaction. LCP, as investment consultant to Clara Pension Trust, helped to support with the investment aspects of the transaction, and the transition to Clara.

Commenting on the transaction, Dev Gandhi, Senior Consultant, LCP said: 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 transaction 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.”

Jonathan Griffith, Partner and Head of Endgame Innovation, LCP added: “We are delighted to see the first deal done. The superfund transaction reflects a reinvigorated commitment to delivering improved outcomes. Clara represents one of a growing number of new endgame options for pension schemes to embrace as a way to secure benefits for pension scheme members whilst also offering enhanced value for other stakeholders.”