The trustees of the Debenhams Retirement Scheme have agreed a £600m bulk transfer to Clara, marking the UK’s second ever superfund transaction, and the first deal from a scheme that has been through the Pension Protection Fund (PPF) assessment.

Debenhams’ pension schemes automatically entered into a PPF assessment period following the insolvency of Debenhams.

However, the deal with Clara restores scheme benefits for all 10,400 members of the scheme, with £4m in back-payments to be paid to members who received reduced pensions during the assessment period, when benefits were aligned to PPF compensation levels.

An additional £34m of ring-fenced capital will also be injected by Clara Pensions to further improve the security of benefits and help provide increased certainty on the journey to an insured buyout in five to 10 years’ time.

Hymans Robertson acted as the lead transaction adviser to the trustee, while Osborne Clarke acted as legal adviser to the trustee and Eversheds Sutherland provided legal advice to the Clara Trustee.

LCP, meanwhile, acted as investment consultant to Clara Pension Trust, and helped to support with the investment aspects of the transaction, including the transition to Clara.

Broadstone also helped to support the scheme on the deal, having previously taking over the day-to-day administration of the scheme in June 2022, and will continue to administer the Debenhams Section of the Clara Trust.

The trustees of the scheme, chaired by Vidett client director, Mark Cliff, were also supported by the PPF in considering which options outside of the lifeboat would provide the best possible outcome for members.

The trustee has now written to inform members of the intention to transfer their pension benefits to Clara, with the formal transfer of members to proceed in April 2024.

Commenting on the deal, PPF chief customer officer, Sarah Protheroe, said: “This is a positive outcome for members of the Debenhams Scheme.

"When a scheme enters PPF assessment, our focus is always to protect members and achieve the best available outcome for the scheme. We’re pleased that our collaborative approach working with Clara, coupled with the value from our specialist PPF panellists, has helped secure a better than initially expected outcome for members.

"This deal also demonstrates the success of our PPF+ Advisory panel which we introduced in 2022 to support overfunded schemes to explore options beyond the PPF as well as the PPF's ability to continue to evolve to meet the needs of the chain to landscape of defined benefit (DB) pensions.”

Broadstone PPF team head, Liz Loosmore, added: “We’re delighted to be on the PPF’s specialist Administration and Actuarial Services panel and it’s been great to be part of the scheme’s journey, navigating through the PPF assessment and helping get the scheme transaction ready.

“We are very much looking forward to continuing to deliver our exceptional award-winning administration services to members of the scheme as it enters into this new exciting phase with Clara pensions.”

Adding to this, Hymans Robertson head of alternative risk transfer and lead advisor, Iain Pearce, said: “We’re thrilled to have secured this fantastic outcome and helped find a way for members to have their full entitlement restored by transferring benefits to Clara.

"This has been far from certain during the period since the scheme entered PPF assessment in 2019. It has been exciting to support the emergence of superfunds as a new valuable option for trustees.

"It’s enabled the trustees to continue, in challenging circumstances, to fulfil the promise previously given to members.

“The process and framework for a superfund transaction is very different to other de-risking solutions.

"Our clarity on the key requirements and commitment to engage positively with the de-risking market as a whole was also important in achieving this transaction. It’s great to see that it has resulted in such a positive result for members and to have maintained a very high level of confidence from all stakeholders from start to finish.”

The latest deal means that Clara will be looking after the benefits of 20,000 members, building on the its first ever transaction with the Sears Retail Pension Scheme last year.

And more deals could be on the way, as Clara Pensions CEO, Simon True, recently suggested that the superfund's pipeline of deals has “more than doubled” to £10-15bn since the announcement of its first transaction.

Industry experts suggested that the deal could also ease concerns around being an early adopter, noting that this latest transaction means Clara now has over £1bn of assets under management, bringing efficiencies and increased scale that are expected to continue to improve.

LCP senior consultant, Dev Gandhi, said: “Clara’s second superfund transaction has come swiftly, demonstrating the market’s growing confidence and means - in less than 6 months since its first transaction - Clara’s asset base has already reached over £1bn.

“With a growing interest amongst other schemes - and any concerns around being an ‘early adopter’ eased - we expect the superfund market to go from strength to strength in the months ahead.”

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