Clara-Pensions opens for UK superfund deals after watchdog clearance



By Carolyn Cohn

LONDON, Nov 30 (Reuters) - Pensions consolidator Clara-Pensions is open to deals to manage UK company final salary benefit schemes after becoming the first British firm to win regulatory clearance to act as a superfund, it said on Tuesday.

Pension superfunds are designed to manage several pension schemes together, and offer a lower-cost alternative to insuring them through a so-called bulk annuity of the type provided by life insurers such as Aviva AV.L , Legal & General LGEN.L and Phoenix PHNX.L .

"Clara’s member-first model is ready for transactions," said Clara-Pensions' Chief Executive Adam Saron, adding that the firm was now planning its deals for the coming year.

British companies have nearly two trillion pounds ($2.67 trillion) in defined benefit, or final salary, pension schemes, most of which are closed to new members.

Nearly half are in deficit, and many companies are looking to offload the schemes, which can be a drag on their balance sheets.

The Pensions Regulator said on Tuesday that Clara-Pensions was the first superfund to pass its assessment process.

The superfund model is new Link but has similarities to the Dutch pension system, where individual company pension schemes have been joining bigger, sector-wide programmes.

Superfunds can "increase protection for savers and their pensions, whilst providing employers with a new, affordable option to manage their legacy pension responsibilities”, said Britain's minister for pensions and financial inclusion Guy Opperman.

But the structure has come in for criticism from bulk annuity providers on the basis that it may provide less protection for policyholders.

"It is vital...that trustees and employers still carry out their own thorough due diligence to ensure they are confident a superfund is the right option for their particular scheme and members," said Nicola Parish, TPR’s executive director of frontline regulation.

Employers should only consider a superfund which is on the TPR's list, she added. "We expect employers considering a superfund to come to us for clearance.”

The first superfund deals will likely be finalised next year, said Iain Pearce, senior risk transfer consultant at pensions consultants Hymans Robertson, though he added that he expected the regulator to "closely scrutinise all cases".

($1 = 0.7490 pounds)
Reporting by Carolyn Cohn; Editing by Huw Jones and Jan Harvey

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.