As schemes mature more trustees and sponsors are seeking insurance solutions to manage pension scheme risks and volatility.
These are among the most significant and longest-term transactions that pension fund trustees will ever enter into, with major implications for member security and for trustee and employer exposure to any ongoing risk.
We have a market-leading practice advising trustees and employer sponsors on all types of pensions risk transfer transactions, including longevity deals, and full or partial buy-ins and buy-outs. We help you to understand all of the jargon and the latest products so that you can consider whether these are the right options for your pension scheme.
All of our specialists have extensive experience of working with pensions clients on large and complex transactions and exercises. This is a fast-developing area and we are at the cutting edge of market practice.
We will help you to identify and deal with the issues, including:
- assessing and managing counterparty risk
- treatment of member data
- the systems and processes required to support and monitor collateral regimes
- how closely a contract matches liabilities and how much this really matters (including “all risks” buy-outs and “perfect” hedges)
- whether liabilities can be reshaped (see more about liability management)
- how longevity or buy-in contracts fit with a scheme’s overall strategy and diversification of investments
- direct access to the reinsurance market
- the impact of Solvency II regulatory capital requirements on existing or new contracts
- the implications of risk-management transactions for eventual buy-out
- whether trustees will be properly discharged from their obligations after buy-out.
We integrate closely with your project team and your other advisers for maximum efficiency and provide holistic advice so that you have a full understanding of the transaction – not just the workstreams involved and how it will run, but also what the longer term implications for you will be.
As well as insurance transactions we have a wealth of experience advising on risk management investments such as derivative contracts (find out more about our pensions investment practice and security structures to support scheme funding).
"The team are 'highly regarded for advising some of the industry's largest pension schemes on high-profile longevity transactions and bulk annuity purchases.'"
"the team continues to excel at overseeing complex de-risking exercises and cross-border transactions."
Advising British American Tobacco on a buy-in of the British American Tobacco UK Pension Fund insuring £3.4 billion of liabilities with Pension Insurance Corporation. The agreement secures the benefits of 10,600 members (8,300 pensioners and 2,300 non- pensioners). It is the third largest transaction in the UK to date and is the largest ever including both pensioner and deferred members.
- Advising the Nortel Networks UK Pensions Trust Ltd on a £2.4 billion PPF-plus buy-out for the Nortel Networks UK Pension Plan with Legal & General, allowing the Plan to exit its 10 year PPF assessment period.
- Advising the TRW scheme trustee on the biggest ever UK buy-out (at that time) of c.£2.5billion of liabilities.
- Advising the Scottish and Newcastle Pension Plan (sponsored by Heineken) on a £2.4billion longevity hedge transaction.
- Advising the trustees of the AXA UK Group Pension Scheme, as conflict counsel in relation to its £2.8billion insurance-wrapped longevity hedging transaction.
- Advising the Lehman Brothers Pension Scheme on its £675million bulk annuity deal with Rothesay Life.
- Advising the Greenalls Group Pension trustees in relation to a "PPF plus" buy-out with innovative features.
- Advising the Akzo Nobel (CPS) Pension Scheme on a £1.4billion longevity hedging policy.
- Advising the trustee of the Rolls-Royce & Bentley Motors Pension Scheme on its £400million longevity insurance contract with Abbey Life.
- Advising the Mirror Group Pension Scheme on a £250million buy-in of pensioner liabilities.
We participate in a wide range of pensions industry groups including the steering committee of the Institute and Faculty of Actuaries' Member Interest Group (MIG) for bulk annuities and longevity swaps.
Engaged Investor Buyout Report: It's a Legal Contract of Some Complexity - 30 November 2016