DB Superfunds: Wates’ breakthrough transfer

Background

The first two transfers to the DB Superfund Clara-Pensions (Clara) involved schemes with distressed (or non-existent) sponsors. The transfer for the Wates Pension Fund (Wates), represented a watershed moment for this market, as it was the first involving a scheme with an active sponsor.  

Our approach

LCP acted as the lead transaction adviser to the Trustee, delivering expertise across multiple workstreams. This included negotiating the commercial agreement with Clara to provide a secure home for members’ benefits, and being the first scheme with a non-distressed sponsor to fully assess itself against the Pension Regulator’s gateway test criteria for a DB Superfund transfer.  

By leveraging our deep industry knowledge and broader experience of risk transfer transactions, we helped the Trustee navigate the regulatory requirements and secure a positive outcome for members. 

The outcome

As part of the transfer, material financial support was provided by both the sponsor and by Clara ensuring members' benefits are well protected. 

More broadly, this transfer demonstrates that a DB Superfund is now a viable alternative exit option for a broader range of schemes, and likely to be a catalyst for the DB Superfund market at large. We are proud to have played a central part in it and look forward to seeing further transfers and new market participants in the coming months.  

What to expect in the superfund market  

We welcome the forthcoming relaxation of the current gateway tests for superfund transfer (as legislated for in the 2025 Pension Schemes Bill) and see that this is likely to further the momentum in the superfund market, with further new superfund market entrants expected over the rest of the year. 

 It's great to see the increased choice and flexibility for pension schemes, supporting to deliver better outcomes for members.