Wates Group Pension to Transfer 1,500 Members to UK ‘Superfund’

U.K. defined benefit consolidator Clara-Pensions Ltd. announced Thursday that it will take custody of the pension liabilities of the Wates defined benefit pension plan, which includes 210 million pounds ($267 million) in assets for 1,500 beneficiaries. Wates is a U.K.-based construction and property services company.

The transaction is the U.K.’s third “superfund” transaction and the first with an active sponsor, according to the Clara-Pensions announcement. Through this model, members of the Wates pension will spend from five to 10 years under Clara-Pensions, after which pension liabilities will be bought out by an insurer.

Clara operates a pension risk transfer and consolidation model it calls the ‘superfund,’ in which the trustees of individual pension funds transfer their assets and liabilities to Clara, removing the employer covenant, which is replaced by a funded capital buffer.

In the Wates transaction, Clara will also provide 19 million pounds in funding to the plan in the form of a one-off payment to support the plan’s financial health.

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The capital buffer is funded by Clara’s capital providers. According to Clara, the one-off payment is less than the costs of running a plan in-house, with lower risk to the business. The goal of this model is to give a plan under custody five to 10 years to improve its funded status and prepare it for a buyout with an insurer.

“Superfunds, like insurer buyouts, allow companies to remove DB pension promises from their balance sheets and streamline for broader corporate activities, such as corporate restructuring,” wrote Suzanne Vaughan, head of retirement at WTW, in January after Clara announced a similar transaction. “However, the cost of a superfund transaction is generally expected to be materially less than the equivalent cost of an insurer buyout, making it an attractive option to consider in the right circumstance.”

Clara-Pensions has already made two such transactions: the first in November 2023, when 9,600 members of the Sears pension were transferred to Clara, and another in March, when 10,400 members of the Debenhams Retirement Scheme were transferred.

The Wates transaction is the first with an active sponsor, according to the announcement. This transfer comes as the U.K.’s Labour Party government is pushing, led by Chancellor of the Exchequer Rachel Reeves, for pension reforms, specifically calling for the consolidation of more than 80 multi-employer defined contribution plans into a handful of funds.

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Tags: Clara-Pensions, Pension Risk Transfer, PRT, Suzanne Vaughan, Wates Pension, WTW

The five New York City retirement systems have collectively invested or committed $23.08 billion with minority and women-owned business enterprises, as of June 30, accounting for 13.33% of their U.S.-based actively managed assets, according to a recent report from the Office of the New York City Comptroller.

Those figures are up from $19.5 billion and 12.7% one year ago and $16.8 billion and 11.6% in 2022.

Slightly less than half, or $10.36 billion, of the MBWE investments in 2024 were allocated to emerging managers, many of whom are diverse-owned, the comptroller’s office said, adding that emerging managers typically do not have access to larger institutional investors. This is up from $9.85 billion in 2023.

“Manager diversity is a fundamental component of the fiduciary duty of the New York City retirement systems and integral to enhancing the long-term value of the systems,” Steven Meier, CIO of the New York City Retirement System, said in a statement. “It is correlated with improved investment outcomes—and evidence continues to show this.”

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According to the comptroller’s office, private markets MWBE firms in the funds’ portfolio have outperformed their respective benchmarks with an average public markets equivalent spread of 5%.

“Our MWBE and emerging asset managers are among the best performers in our portfolio,” New York City Comptroller Brad Lander said in a statement. “Their performance this year helped us achieve a 10% return,” he said, adding that “this year’s strong returns [show] that anti-DEI rhetoric, which purports that diversity hinders financial performance, is simply false.”

The report, the first edition of which was published in 2022, details the comptroller’s office’s investments and work with minority- and women-owned investment firms, emerging managers and MWBE professionals in municipal finance. According to the comptroller’s office, the report is not only intended to increase transparency and accountability, but also to show that “ongoing political attacks” on diversity, equity and inclusion, as well as environment, social and governance considerations, are “misguided.”

According to the report, the comptroller’s office expects attacks on DEI and ESG initiatives to grow, adding that some investors are rolling back their programs and compounding an “already challenging investment environment” for MWBE and emerging manager firms.

“As influential investors, we reject the outdated misconception that prioritizing diversity undermines performance,” Meier said in the statement. “Instead, we intentionally champion diversity as a strategic imperative, setting a powerful example for the industry to follow.”