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Travers Smith advises TRW Pension Scheme on the UK's Largest Bulk Pension Buy-Out

Sunday, 21 January 2018
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Thursday, 27 November 2014

Travers Smith advised the trustee of the TRW Pension Scheme on a landmark £2.5 billion partial buy-out with Legal & General, the largest pensions buy-out in the UK to date.

This transaction was part of an innovative package that included:

  • An offer to over 15,000 pensioners to exchange future inflation-linked increases
    for a higher level of non- increasing pension income and to have their benefits secured with Legal & General.  37% accepted.
  • The buy-out with Legal & General of a further 16,000 pensioners’ benefits, taking the total buy-out to £2.5 billion.
  • An offer to deferred pensioners to take enhanced transfer values.
  • An option for pensioners and deferred pensioners with benefits worth less than £18,000 to cash out their benefits.
  • Additional funding to maintain the funding level for remaining members’ benefits in a residual £1 billion scheme that will be easier for its sponsor to support.

The buy-out elements were novel and complex.  The terms were agreed before the offers
were made to pensioners and had to cover a range of possible outcomes.

Paul Stannard, Travers Smith’s Head of Pensions, said:

“This was an ambitious project and the trustee board is to be congratulated on achieving these outcomes for the members of the TRW Pension Scheme. We are delighted to have helped the trustee offer these new options to members and improve the security of members’ benefits.”

TRW Automotive ranks among the world's leading automotive suppliers.  Headquartered in
Livonia, Michigan, USA, the company, through its subsidiaries, operates in 24 countries and employs approximately 65,000 people worldwide.

The TRW Pension Scheme provides pension benefits to over 46,000 beneficiaries with assets of £3.5 billion.  The scheme is sponsored by a UK subsidiary and its trustee is TRW Pensions Trust Limited.  The Scheme was established in 1928 by Lucas, which became part of Lucas Varity and then TRW Automotive.  It closed to future accrual in 2009. 

The Travers Smith team was led by Paul Stannard, head of pensions. Other members of the team included finance partner, Peter Hughes, Dan Naylor (associate, pensions), Sarah Boon (consultant, pensions) and Joe Wren (associate, finance).


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