For our recent webinar, Clara Pensions’ CEO discussed the rapidly evolving world of DB consolidation and endgame.
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As Clara approaches its fourth transaction, CEO Simon True shared candid insights about building a “member first” superfund in a market that’s changing faster than anyone predicted.
“We got typecast,” Simon told our Wednesday Wisdom audience. Clara’s first two deals were schemes with bust sponsors – Sears and Debenhams. But their third transaction was with an active sponsor, and 18 months later they’re announcing their fourth transaction with a different structure again. The DB pensions world is changing faster than anyone expected.
The market that changed overnight
Simon pinpointed the moment: “The LDI crisis was very short, but schemes suddenly woke up one day to find they were far better funded than they thought.” Trustees who thought they had 5 to 10 years to plan their endgame suddenly needed to act. Some could suddenly afford buyout. Others found themselves in Clara’s sweet spot – close to buyout but not quite there.
Why every scheme needs different treatment
“Every pension scheme is unique,” Simon emphasised. Each has its own history, governance issues, and funding position. Clara’s learned this through experience:
- Its first two deals were with schemes with no sponsor, as an alternative to the Pension Protection Fund
- The third deal was with an active employer that contributed to the transition
- The fourth deal will be a “connected covenant” model where the employer stays linked to the scheme
What members actually experience
Louise Ellisdon, Senior Business Development Manager, explained during the webinar how her team had called members directly to ask about their experience. These weren’t the usual surveys, they were actual conversations, and some of them lasted over 30 minutes. “Every single member knew who Clara was,” she found. Members cared about simple things: easy processes, quick responses, help when they made mistakes on forms.
The brutal commercial reality
Simon was refreshingly honest about challenges. Watching schemes become affordable for insurers during the LDI crisis, just when Clara was trying to complete deals was “pretty horrible”. Two regulatory tweaks in August 2023 saved them – allowing discount rate reviews and a 9-month transaction window.
What’s coming next
Simon expects £20bn+ in consolidation vehicles within 5 years. The Pensions Bill should provide the framework everyone needs. But challenges remain – schemes below £50m struggle with fixed transaction costs. He has ambitions for Clara to qualify as a ‘megafund’ with £25bn+ AUM. A superfund that’s also a megafund!
The bottom line
Simon reflected on how the DB endgame isn’t a single destination anymore. It’s a menu of options. The schemes that win will be those that understand their options early and pick the right path for their members.
