Clara-Pensions has completed a £55m transaction with the Church Mission Society Pension Scheme, its first with a not-for-profit sponsor and fourth overall. The sponsor has chosen to combine capital from Clara with an ongoing sponsor guarantee.  

The superfund said the charity is the first to make use of Clara’s new ‘connected covenant’ structure to get its scheme, covering 730 members, to buyout.  

Clara said the connected covenant model provides additional security for members and believes there to be strong interest in it.  

There are roughly £10bn of unsecured defined benefit liabilities in the wider charitable sector, according to Clara, which added there is growing recognition of consolidation as a route to secure pension obligations while prioritising charitable work. 
 
“As trustees we are focused on our duty to ensure pensions are paid, and this transaction means our members’ pensions are more secure. The new arrangement benefits from significant financial commitments from both CMS and Clara, in addition to the ‘connected covenant’ which means our members retain the long-term protection of our existing security package,” said trustee chair Richard Hubbard from Capital Cranfield Trustees.  

“Church Mission Society is deeply committed to the wellbeing of our employees past, present and future and so I, and the rest of the senior leadership team, are pleased to be able to take this important step towards ensuring the security of our mission partner and staff pensions,” added the chief executive of the Church Mission Society, Alastair Bateman.  

Clara’s chief transaction officer Matt Wilmington said: “This transfer is not only the first involving a charity, but also the first to use a connected covenant structure – an important new layer of protection for members.”  

A spokesperson for the Pensions Regulator said: “We have recently cleared the fourth transfer to a superfund. No two transfers have been the same which demonstrates how we are flexible in our support of innovation in this growing market. We continue to work constructively with trustees and employers looking to transfer their DB scheme to a superfund.”

The scheme trustees used consultants Barnett Waddingham and law firm Burges Salmon, while the Church Mission Society was advised by Hymans Robertson and lawyers from Gunnercooke.  

Jack Sharman, senior risk transfer consultant at Barnett Waddingham, said his firm is proud “to have demonstrated that superfund transactions can be accessed even by smaller schemes in the not-for-profit sector, which can face unique challenges.  This, together with the innovative new covenant structure for this transaction, means that it is an exciting time to find new solutions in the pension risk transfer space”.  

The connected covenant structure means that the capital protection from Clara is in addition to the security the scheme already has from the Society, explained Hymans Robertson alternative risk transfer specialist, Harry Allen. 

 

“This covenant enhancing, rather than covenant replacing, structure is a real breakthrough in the superfund market, which is now gaining significant momentum.”  

Clara, which continues to be backed by investment firm Sixth Street, had legal advice from Cameron McKenna Nabarro Olswang, and its due diligence was supported by Heywood Pensions Technologies. The Clara Trustee receives ongoing advice from consultancy Hymans Robertson, fiduciary managers Van Lanschot Kempen and law firm Eversheds Sutherland.