The trustees of the Sears Retail Pension Scheme have agreed to transfer around 9,600 members to Clara Pensions, in the UK’s first defined benefit (DB) superfund transaction.

Clearance for the transfer has been received from The Pensions Regulator, with the formal transfer of members is expected to begin at the end of November.

As part of the deal, scheme members will benefit from an additional £30m of ring-fenced funding to support the scheme, which is expected to "demonstrably" improve member security and provide increased certainty on their journey to an insured buyout.

The deal represents the UK's first superfund transaction, following on from the news that Clara Pensions has become the first DB superfund to complete The Pensions Regulator’s assessment process in 2021.

Commenting on the deal, the Sears Retail Pension Scheme trustee, stated: “We have been carefully managing the scheme with the aim of securing all members’ benefits with an insurance company through a full buyout in the future.

"As part of this transaction, Clara will provide an additional £30m of funding, which will support the scheme’s journey to a successful buy-out and provide greater security for members.

"The scheme’s current administrator Isio will remain in place and Clara is committed to putting members’ needs first, which will ensure members continue to receive the excellent quality of support we have committed to as trustees.

"We are delighted to have reached this agreement with Clara and are confident that the proposed transfer is firmly in our members’ best interests.”

Clara Pensions CEO, Simon True, also highlighted the news as a “landmark day” for Sear’s members, “as they become the first members of Clara and will benefit from a day 1 injection of new, ring-fenced capital of £30m to support their journey to an insurance buyout”.

“Members will be able to take confidence in the improved financial security of their benefits and the commitment and expertise of Clara,” he continued.

“Insurance 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 and their members.

“This agreement with the Sears trustees is the UK’s first pension superfund transaction. Clara is now firmly on the road to making defined benefit pensions safer and more secure for thousands of people.”

News of the deal was also welcomed by the Department for Work and Pensions, as Pensions Minister, Laura Trott, stated: “We welcome the transfer, the first of its kind in the emerging superfund market, the expansion of which forms part of our longer-term plan for pensions.

“I am confident the market will continue to grow, freeing up employers to focus on their core business, and assisting in the government’s push for increased productive investment within the pensions sector.”

Adding to this, Economic Secretary to the Treasury, Andrew Griffith, commented: “Superfunds are an important innovation to British pension provision. Economies of scale from superfunds can do wonders for pensions – making people’s retirement more secure whilst enabling a broader range of investments in productive finance.

“It is great to see Clara Pensions taking on its first 9,600 pension savers – injecting an additional £30m to an existing £590m scheme - and in the process becoming the UK’s first superfund transaction.”

TPR executive director of frontline regulation, Nicola Parish, also welcomed the news, stating: “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.”

Clara's model acts as a ‘bridge to buyout’, utilising the benefits of scale to reduce costs and invest appropriately in preparation for a future buyout with an insurance company.

Under this approach, schemes entering Clara are placed in separate sections of the Clara Pension Trust. Additional capital from Clara’s capital providers is injected to create a funding buffer for the scheme.

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