Arco Group Pension Scheme agrees to transfer to Clara superfund during M&A

The Arco Group Pension and Life Assurance Scheme has agreed to transfer its 1,281 members and approximately £135m of assets to defined benefit (DB) scheme consolidator Clara-Pensions.

The transaction is happening during the sale of safety equipment supplier Arco Limited. While Arco’s sale continues, the agreement will give members greater certainty over the future of the pension scheme.

An agreement of this kind is a first for Clara and demonstrates the supportive role that DB superfunds can play during mergers and acquisitions.

Richard Wellard, head of alternative risk transfer solutions at consultancy Hymans Robertson, responded to the news: “As trustees and sponsors evaluate a broader range of endgame options, superfunds are increasingly becoming a routine part of those discussions, rather than a solution considered only in a limited set of circumstances.”

Jo Harris, senior trustee director at Dalriada, representing Clara’s trustees, said: “Our role and fundamental aim is protecting the long-term interests of our members and we have carefully considered the options available to the scheme to achieve this. The sale of the business presented a unique opportunity to improve the security of members’ benefits overnight, whilst aligning with employer and shareholder objectives, and Clara’s innovative superfund was the perfect model through which to achieve this.”

“Reaching this agreement alongside the wider corporate transaction required a highly dynamic team effort between the Trustee, the Sponsor, Clara and advisers. We are delighted to have secured an outcome which puts members on a stronger footing for the future, and wish the Arco team well under new ownership.”

This type of transaction could be just the beginning of more superfund innovation. Richard Wellard added: “Looking ahead, the superfund landscape is set to expand even further. With the prospect of additional providers such as TPT entering the market, we expect increased competition, continued innovation and a growing volume of transactions. As the market develops, the range of schemes and situations for which a superfund solution may be appropriate is likely to continue expanding.”