The Arco Group Pension and Life Assurance Scheme has agreed to transfer its 1,281 members and approximately £135m in assets to the defined benefit (DB) superfund, Clara Pension Trust, as part of the wider sale of Arco Limited.

Clara Pensions said the agreement was completed alongside the sale process, giving the trustee, sponsor and prospective owner greater certainty over the scheme's future, while scheme members will benefit from additional ringfenced capital and greater security in the longer term.

The trustee was advised by XPS as actuaries and investment consultants, Pinsent Masons as pension lawyer, and EY as covenant adviser.

Meanwhile, Arco Limited was advised by KPMG as actuaries and strategic adviser, Squire Patton Boggs as pension lawyer, and PwC as covenant adviser.

It is the first time that Clara has been part of a transfer structured explicitly alongside a corporate transaction.

Pension schemes can be a significant consideration in mergers and acquisitions (M&A), particularly when stakeholders seek certainty about the future of members' benefits.

Clara argued the deal addressed those considerations while improving member outcomes.

Arco Limited chief financial officer, Dan Carr, said: “The security of our pension scheme members was a key consideration throughout the wider sale of the business, and Clara was identified early on by KPMG as being able to provide the necessary comfort to members within the context of a corporate transaction.”

Reflecting on the trustee's decision, Dalriada senior trustee director, Jo Harris, added that the sale had created “a unique opportunity to improve the security of members’ benefits overnight,” while meeting the needs of the employer and shareholders.

The transfer also highlighted the wider role superfunds can play in helping businesses manage legacy DB liabilities during periods of change.

Clara Pensions chief transactions officer, Matt Wilmington, said: “The priority remains securing a better outcome for members, but doing so can also provide greater certainty for businesses as they pursue important strategic transactions.”

According to Wilmington, Clara worked with the scheme and advisers in an “accelerated timeline” to meet the demands of the sale process.

He added this latest transaction comes following the transfer of a second small pension scheme to Clara earlier in September.

Commenting on the significance of the deal for the superfund sector, Hymans Robertson head of alternative risk transfer solutions, Richard Wellard, said superfunds were increasingly being considered in a wider range of situations, and in this case, to support an M&A transaction.

“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.”

Looking ahead, Wellard said he expected the superfund landscape 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.”

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