Hymans Robertson leads commercial advice on first ever ‘connected covenant’ Clara-Pensions deal

Hymans Robertson has acted as lead adviser to Church Mission Society (“CMS”) throughout the transfer of members of the CMS Pension Scheme to Clara-Pensions (“Clara”). It led the advice on the commercial aspects of the transaction. This structured deal marks several industry firsts: the first ever ‘connected covenant’ superfund transaction, the first involving a small scheme and the first for an employer in the not-for-profit sector. It is the fourth UK superfund transaction completed by Clara to date, with Hymans Robertson having led the advice on 50% of these landmark deals.

The innovative and new connected covenant structure, developed specifically for this transaction, maintains the Scheme’s existing covenant protection through an ongoing guarantee from CMS. Not only are members’ benefits protected by the additional capital from Clara, but they also continue to be protected by the CMS covenant they enjoyed before the transfer. The outcome is a clear enhancement of member security. 

Commenting on the announcement today of CMS’s deal with Clara, Harry Allen, Alternative Risk Transfer Specialist at Hymans Robertson, says: 

“This transaction represents a fantastic outcome for members of the Scheme and Church Mission Society. The innovative “connected covenant” structure means that the capital protection from Clara is in addition to the security the Scheme already has from the CMS. This covenant enhancing, rather than covenant replacing, structure is a real breakthrough in the superfund market, which is now gaining significant momentum.”

“Following on from Debenhams last year, Hymans Robertson has now led 50% of the superfund transactions completed to date – we’re excited to be at the forefront of innovation in the superfund and alternative risk transfer market as it gains significant momentum.”

Richard Hubbard of Capital Cranfield, Chair of Trustee, CMS Pension Scheme, said:

“This is really good news for our members. As trustees we are focused on our duty to ensure pensions are paid, and this transaction means our members’ pensions are more secure. The new arrangement benefits from significant financial commitments from both CMS and Clara, in addition to the ‘connected covenant’ which means our members retain the long-term protection of our existing security package. With the Clara trustee taking over our responsibilities in a seamless manner, we are confident our members are in good hands.

“I have been impressed with how all the parties worked together, and would like to pass on my thanks to all the advisors for their collegiate behaviours.”

Alastair Bateman, Chief Executive Officer at Church Mission Society, said: 

“Church Mission Society is deeply committed to the wellbeing of our employees past, present and future and so I and the rest of the senior leadership team are pleased to be able to take this important step towards ensuring the security of our mission partner and staff pensions.”

Matt Wilmington, Chief Transactions Officer at Clara-Pensions, said:

“This marks Clara’s fourth transaction and a landmark for the not-for-profit sector. We’re proud to support the Church Mission Society in securing the long-term future of its members’ pensions, while enabling the organisation to refocus on its core charitable purpose. This transfer is not only the first involving a charity, but also the first to use a connected covenant structure – an important new layer of protection for members.”