This deal marks the first UK superfund transaction to adopt a ‘connected covenant’ structure, offering an additional layer of security for members' benefits, and the first in the not-for-profit sector – demonstrating the growing accessibility of innovative risk transfer solutions.
A secure route to buy-out for 730 members
Under the transaction, 730 members and £55 million of assets will transfer to Clara. Members will continue to receive their full pension entitlements, with no disruption to payments. In line with Clara’s model, the scheme will eventually move towards full insured buyout over a period of five to 10 years.
We advised the trustee throughout the process, delivering integrated support across risk transfer, actuarial, administration and investment consulting. We played a pivotal role in helping the trustee and sponsor to navigate the process of obtaining regulatory clearance for the transaction.
Clara and CMS have both committed additional capital to enhance the security of members’ benefits. In addition, a new ‘connected covenant’ structure has been developed – retaining a long-term guarantee from CMS alongside Clara’s capital buffer, further strengthening the protection for members.
Delivering bespoke solutions for the not-for-profit sector
Jack Sharman, Principal and Senior Risk Transfer Consultant at BW, said: “The CMS scheme is a longstanding client of BW, and we have worked collaboratively with the trustee and sponsor over many years to improve the scheme’s security. It’s extremely pleasing to have completed this journey by putting members on a clear path towards a full buyout. We’re particularly 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 covenant structure, signals an exciting new chapter for the pensions risk transfer market.”
Positive outcomes for members and sponsor
The CMS Pension Scheme is the fourth to transfer to Clara, following previous transactions including the Sears Retail scheme for which we provided investment advice. With this deal, Clara now manages more than 21,000 members and over £1.4 billion in assets.
Richard Hubbard of Capital Cranfield, Chair of Trustees of the CMS Pension Scheme, said: “This is really good news for our members. 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. With the Clara trustee taking over our responsibilities in a seamless manner, we are confident our members are in good hands. This marks Clara’s fourth transaction and a landmark for the not-for-profit sector."
Alastair Bateman, Chief Executive Officer at Church Mission Society, added: “Church Mission Society is deeply committed to the wellbeing of our employees past, present and future. I and the rest of the senior leadership team are pleased to take this important step towards securing our pension scheme members’ futures, while refocusing our resources on our charitable mission.”
Matt Wilmington, Chief Transactions Officer at Clara-Pensions, said: “This marks Clara’s fourth transaction and a landmark for the not-for-profit sector. We’re proud to support the Church Mission Society in securing the long-term future of its members’ pensions, while enabling the organisation to refocus on its core charitable purpose.”
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