The James Neill Pension Plan has completed a capital-backed investment (CBI) transaction with Portunes Pension Capital, marking the second capital-backed funding deal in the UK pensions market.

Under the structure of the deal, the scheme and Portunes will invest alongside one another over a defined period, with the scheme receiving a senior-ranking payout backed by external capital at maturity.

CBIs offer schemes access to external capital, aiming to reduce investment volatility and accelerate long-term funding objectives.

The transaction looks to support the scheme’s long-term funding objectives while enabling it to keep its existing investment strategy, retain its illiquid assets portfolio, and support its liability-driven investment (LDI) strategy.

The previous capital-backed pension transaction was completed in 2020, known as the Nova transaction, with an unnamed UK pension scheme securing member benefits using capital provided by Portunes through a capital-backed journey plan (CBJP).

The trustee of the James Neill Pension Plan, represented by Aretas Trustees, and the scheme sponsor James Neill Holdings were provided with legal advice from Burges Salmon as part of a wider adviser team.

This team included Fieldfisher as legal adviser to Portunes, Gallagher as investment adviser to the trustee, and Schroders as investment manager.

Additional advice was provided to the trustee by Carey Olsen and to Portunes by Ogier.

“The successful completion of this transaction represents an important step forward for the plan and demonstrates the value of innovative funding solutions in today’s pensions landscape,” commented Aretas Trustees partner and chair, Anthony Miller.

"We are pleased to have completed this landmark transaction on behalf of the James Neill Pension Plan.

"Capital-backed transactions come in different guises and represent an exciting development in the pensions landscape, offering schemes a compelling blend of downside protection and upside potential.

"This transaction demonstrates how innovative structuring can deliver tangible benefits for members, particularly through retaining exposure to existing illiquid assets and integrating seamlessly with an LDI framework.

"We hope to follow the success of the Nova transaction, both of which highlight the growing maturity and viability of capital-backed solutions as part of a modern pension strategy."

Burges Salmon partner, Clive Pugh, added: “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.”

Also commenting on the deal, Fieldfisher partner, Sebastian Reger, said: "This transaction highlights the increasing sophistication of solutions available to pension schemes seeking to manage funding risks and objectives in a challenging market environment.

"Capital-backed funding transactions can be tailored to meet the specific needs of individual pension schemes.

"While Portunes's first CBJP focused on delivering a buyout solution, we evolved the structure to strengthen the scheme's investment arrangement to incorporate existing illiquid assets without the need to transfer them and to accommodate the desire for LDI hedging."

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