Clara-Pensions and Debenhams Trustee to Exit PPF Assessment

Clara-Pensions, a consolidator for defined benefit pension schemes, and the Trustees of the Debenhams Retirement Scheme have finalized an agreement, marking the UK's second-ever superfund transaction. This development comes after the Debenhams Scheme, comprising 10,400 members, entered the Pension Protection Fund’s (PPF) assessment period following Debenhams' insolvency in April 2019. Now, these members will transition to Clara, where they will receive their promised pensions in full upon retirement.

During the assessment period, trustees and the PPF work on preparing the scheme for transfer, addressing data issues, and conducting a thorough administrative review. This process ensures a smoother and more expedited transition to a buyout provider or consolidator.

As part of the agreement, £4 million in back-payments will be distributed to members who received reduced pensions during the PPF assessment phase when their benefits were adjusted to PPF Compensation levels. Additionally, Clara will allocate an extra £34 million in dedicated funding to bolster support for Debenhams Scheme members. This infusion significantly enhances member security and offers greater certainty regarding the path to an insured buyout within five to ten years.

The Debenhams Trustee, aided by the PPF in assessing alternative options outside the PPF, has communicated to members its decision to transfer their pensions to the Clara Pension Trust. This step underscores the trustee's commitment to securing the best possible outcome for members' pensions.

This milestone agreement underscores Clara-Pensions' dedication to safeguarding pension benefits and providing stability to members facing pension scheme challenges. The transaction sets a precedent for the industry and demonstrates the effectiveness of superfund solutions in ensuring members' financial security.

Through this collaboration, Clara and the Debenhams Trustee aim to provide a seamless transition for members, offering them the assurance of receiving their entitled pensions without compromise. This move signifies a step forward in pension scheme management and highlights the importance of proactive measures to safeguard members' financial futures.

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.”

Source: Clara Pensions