Clara has announced its first consolidator transaction, covering the 10,000 members in the Sears Retail Pension Scheme in a deal worth £590m

This is a significant milestone for the pensions industry, the culmination of six years of work. Trustees and sponsors have shown consistent interest in executing consolidator transactions in the right circumstances, but the absence of a completed case led to uncertainty around executability.

This deal however moves the goalposts and gives another alternative to buyout much needed credence.

The long road to consolidation

What does this mean for pension schemes?

This is proof that superfunds are a viable alternative to insurance, for the right schemes and sponsors. Alternative solutions, such as Clara and capital backed solutions, are relatively new to the market so do come with their own unique challenges – however, this first Clara transaction is evidence that those challenges are not insurmountable. The key is finding the right solution for a scheme’s individual circumstances and to give a true and fair consideration of the various risk solution offerings available in the market from a range of perspectives. This will require a holistic approach – combining funding, investment and covenant expertise – as well as strategic insight into the risk solutions space.

All in all, a vibrant consolidator market will provide much needed optionality around endgame planning for many schemes that are relatively well funded, but not quite there from a buyout perspective. Here is hoping that Clara’s first transaction is the beginning of a trend.

• Buyout
• Consolidation
• De-risking