Wates said that the move will provide pension fund members with increased financial security in the longer term. There will be no change to members’ benefit entitlements resulting from the transfer, it said.
As part of the transaction, Wates will make an investment of around £19m and Clara will provide additional capital, collectively increasing the security of members’ benefits. This is in addition to contributions of more than £75m that Wates has paid into the fund over the last eight years.
Clara is a consolidation vehicle known as a ‘superfund’ and is designed to offer members safer pensions. It specialises in managing member benefits transferred from pension schemes and is overseen by a board of independent trustees.
The transfer covers £210m of scheme assets for 1,500 members, 110 of whom are current employees of Wates Group, 525 are deferred and 845 are pensioners or dependants. The move is expected to complete in January 2025.
The Pensions Regulator has provided regulatory clearance for the transfer to Clara, which relates only to defined benefits held in the fund (which includes any additional voluntary contributions). Defined contribution benefits are unaffected.
Mike Roberts, chair of trustee of Wates Pension Fund, said: “This is a very positive development, providing increased security for members’ benefits.
“Throughout this process, we have seen the care and commitment Clara has for its members. This, coupled with the additional funding secured from Wates Group and Clara as part of the transfer, has been key to our decision making.
“We are confident that, with the transfer to Clara, members’ benefits will be more secure and, in the future, move to an insurance company sooner than if they remained in the fund.”
Wates Group chief executive Eoghan O’Lionaird said: “Wates continually reviews its pension provisions, working closely with the Wates Trustee as part of our joint commitment to protect the interests and benefits of members, and their dependants.
“Wates has always delivered on its commitments to the fund and this has led us to the strong funding position we find ourselves in today.
“Following a rigorous decision-making process with the trustee, we’ve identified an opportunity to further improve the security of our members’ benefits. This is important to Wates, especially given the challenges of both an uncertain economy and market conditions.”
Amy Hemmett, head of superfunds at PwC, who advised Wates Group on the transaction, said that the switch gave “enhanced security for the members of the Wates Pension Fund, both now and for the future”.
She said: “This transfer to Clara allows members to benefit from the innovation in end-game solutions whilst removing the risks associated with managing defined benefit schemes in the current regulatory environment.
“This transaction demonstrates the growing importance of superfunds in the UK pensions landscape, offering the potential for better long-term outcomes for pension scheme members.”
