- All 10,400 members of the Debenhams Scheme are set to join Clara, the member-first pensions consolidator, beginning their journey to an insured buyout
- All members will receive their originally promised pensions in full, along with back-payments to remedy any reductions in their benefits during the Pension Protection Fund (“PPF”) assessment period
- Clara will provide £34m of new capital to increase the security of members’ benefits in the £600m Debenhams Scheme
- The Debenhams Scheme has been in PPF assessment since 2019
14 March 2024: Clara-Pensions (“Clara”), the member-first consolidator for defined benefit pension schemes, and the Trustees of the Debenhams Retirement Scheme have reached agreement on the UK’s second ever superfund transaction.
The 10,400 members of the Debenhams Scheme, which entered the Pension Protection Fund’s (PPF) assessment period in April 2019 following the insolvency of Debenhams, will now join Clara, where they will receive 100 per cent of their promised pensions in retirement.
During an assessment period, the trustees and PPF prepare the scheme for transfer, including identifying and cleansing data issues and carrying out a full administrative review, which ensures a smoother and quicker transition to a buyout provider or consolidator.
Under the terms of the transaction, £4 million in back-payments will be paid to members who received reduced pensions during the PPF assessment period, when member benefits were aligned to PPF Compensation levels.
Clara will also provide an additional £34 million of dedicated funding to support the Debenhams Scheme members. This significantly improves member security and provides increased certainty on the journey to an insured buyout in five to ten years’ time.
The Debenhams Trustee, who were supported by the PPF in considering which options outside of the PPF would provide the best possible outcome for members, have now written to inform members of the intention to transfer their pensions to the Clara Pension Trust.
Mark Cliff, Chair of Trustees for the Debenhams Retirement Scheme, said: “Ever since Debenhams went into administration, the trustees have been working hard to find a solution that is in our members’ best interests. We are confident that transferring members’ benefits to Clara provides the best available outcome for them.”
“The trustees took extensive professional advice to assess all the options. We have also consulted closely with the Pension Protection Fund and The Pensions Regulator throughout the process. Personally, I would like to thank all our members for bearing with us during what I know has been a long period of uncertainty. A huge thanks also go to our advisory team, and to Clara, for diligently working to provide our members with a solution that delivers a significant improvement to both the level and the security of their benefits.”
Simon True, CEO of Clara-Pensions, said: “This is another landmark day for British pensions and I would like to offer a warm welcome to the 10,400 members of the Debenhams Scheme. The Trustee of the Debenhams Scheme, as well as the Pension Protection Fund, have done an excellent job safeguarding members over the last five years and preparing the scheme for a smooth transition to Clara. We’re honoured to take on the responsibility for the next stage of their journey.”
“By injecting £34m of new capital we are making these pensions more secure and setting them on the path to an insured future in a few years’ time. Joining Clara also means topping up the pensions of all members back to 100% of what was originally promised to them. With 20,000 members now in the Clara Pension Trust, we are firmly on the road to making British pensions safer and more secure.”
Sara Protheroe, Chief Customer Officer, at the PPF, 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 changing landscape of defined benefit pensions.”
Iain Pearce, Partner, Head of Alternative Risk Transfer Solutions at Hymans Robertson, said: “This is a really significant day for members of the Debenhams Scheme, who will now benefit from the additional capital which will be locked away until Clara delivers on its ‘bridge to buy-out’ promise to insure benefits in full in the future. It’s been great to work closely with the Trustees to achieve this outcome for members that would not have been possible prior to the introduction of the superfund regime. We’re pleased to have played our part advising on this groundbreaking project.”
Jonathan Hazlett, Partner, Head of Pensions at Osborne Clarke, said: “We were delighted to act as legal advisers to the trustees of the Debenhams Scheme on the transfer of their members to the Clara Pension Trust. This was a ground-breaking and complex transaction, which has pleasingly resulted in members receiving their full benefits again after Debenhams’ insolvency. It was great to be involved in a transaction where all involved worked collaboratively and efficiently to deliver an excellent result for members.”
Alan Pickering, Trustee, Clara Pensions: “We are delighted by the prospect of welcoming the Debenhams members into the Clara community. Our aim, as with all our members, is to provide them with the peace of mind that they deserve on their pension benefits. We look forward to welcoming these members where they will join our existing 9,600 members from the Sears Retail Pension Scheme.”
Notes:
Clara was established in 2017 and successfully completed The Pensions Regulator’s (TPR) assessment process for superfunds in November 2021. It operates a ‘bridge to buyout’ model and uses 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, led by the global investment firm Sixth Street, is injected to create a funding buffer for the Debenhams Scheme.
Clara completed the UK’s first ever superfund transaction in November 2023, when 9,600 members of the Sears Retail Pension Scheme transferred into Clara. An additional £30 million was injected to support the scheme at that point and the Sears members have now begun their journey to an insured buyout in the future.
Clara also assembled a strong pool of advisers, partners and non-executive directors to ensure it provides members with the safest, best experience possible. These include:
- Lawrence Churchill, Chairman of Clara’s corporate board and the founding chairman of the Pension Protection Fund
- Alan Pickering, Chair of Trustees for the Clara Pension Trust and the former Chairman of the National Association of Pension Funds, now known as the Pensions and Lifetime Savings Association (PLSA)
- Leading consultancies Hymans Robertson and LCP (scheme actuary and investment advisor respectively); fiduciary manager Van Lanschot Kempen and legal firms CMS, Eversheds Sutherland and Travers Smith
PPF panel firms:
This transaction was led and advised by the following parties:
- Trustee: Vidett
- Specialist Administration and Actuarial Panellist: Broadstone
- PPF+ Advisory Panellist: Hymans Robertson
- Legal Panellist: Osborne Clarke
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Media contacts
For Clara: Dave Chambers / Harry McNeill: clara@headlandconsultancy.com
For the Debenhams Trustee: Patrick Foster debenhams@helmpartners.co.uk
About Clara-Pensions
Clara-Pensions is the member-first consolidator for defined benefit pension schemes. It acts as a bridge for pension scheme members, from the company that currently supports their pension to a long-term insured future.
Clara provides a safer pension promise today by combining its own capital and robust governance with additional contributions from sponsors, who can now transfer the burden of their pension liabilities to Clara. This frees up companies to focus on their future growth.
Clara will provide a managed journey to an insured buyout, giving members the security of a fully insured pension earlier. Only once all members have their full benefits secured will Clara provide a long-term return on capital for investors.
For more information, please visit our website at www.clara-pensions.com
About Sixth Street
Clara is backed by Sixth Street, a diversified global investment firm which manages over $74 billion in assets and has more than 500 team members operating around the world. Sixth Street partners with and offers solutions to companies in the pension, insurance and reinsurance industries through its affiliate portfolio companies (including Clara, Talcott Financial Group, and Lifetri Groep) as well as its highly flexible $26 billion Sixth Street TAO platform.
For more information, visit www.sixthstreet.com