A manufacturing company’s defined benefit (DB) pension scheme has agreed a rare “capital-backed investment” transaction with a private investment firm to secure an injection of capital to improve its funding position.
The James Neill Pension Plan – attached to James Neill Holdings, part of garden tools maker Spear & Jackson – has secured funding from Portunes Pension Capital through the arrangement. Portunes will share in a proportion of investment returns.
Law firm Burges Salmon advised on the deal, and partner Clive Pugh explained: “This transaction highlights the increasing maturity of capital-backed solutions in the UK pensions market and the important role they can play in helping schemes manage risk while maintaining investment flexibility.
“We were delighted to support the trustee of the James Neill Pension Plan and James Neill Holdings Limited on this complex and innovative transaction, working closely with all parties to deliver a structure that meets their long-term objectives.”
The deal is just the second such transaction involving a UK pension scheme, following a deal struck in 2020 with an unnamed DB fund and Portunes.
In a press release, Burges Salmon said the arrangement “supports the [pension scheme’s] long-term funding objectives while allowing it to retain its existing investment strategy”.
Portunes will invest alongside the pension scheme for “a defined period”, the press release stated. The scheme has priority for payouts, and Portunes can only realise profits if the scheme has achieved a set goal at the end of the agreed period, such as securing an insurance deal.
Portunes Capital is an investment vehicle set up by Aspinall Capital Partners to channel private investment into strategies supporting pension schemes through injecting additional funding without fresh contributions from the sponsoring employer.
Antony Miller of professional trustee firm Aretas Trustees said the deal was “an important step forward for the plan and demonstrates the value of innovative funding solutions in today’s pensions landscape”.
The James Neill Pension Plan had £94m in assets as of 30 September 2024, according to the company’s most recent annual report, against liabilities of £99.4m.
Redington provided investment advice to the trustee board while Schroders runs the scheme’s assets.
