The Vickers Group Pension Scheme has completed a £1.1bn buyout with Legal & General (L&G).
The deal covering 11,000 scheme members is the largest pension risk transfer conducted so far this year.
Vickers Group is part of the Rolls-Royce Group for whom L&G’s asset management arm Legal & General Investment Management (LGIM) manages about £12bn of assets, a relationship which began in 2007 with a liability driven investment (LDI) mandate and has now culminated in a full buyout.
L&G claimed the relationship enabled it to be innovative in offering certainty to the Vickers scheme during the transition period for the buyout. It said working in partnership with the scheme and its advisers at Mercer, it “provided a smooth transition and the price certainty that the trustees required” and “met the trustees’ and the company’s objectives through an ‘innovative price-lock mechanism’ and an efficient transition of assets”.
Rolls-Royce head of pensions Joel Griffin said: “This is a great testimony to the work of the trustees, their advisers and the company who have worked collaboratively over many years to ensure that this scheme is well funded with a prudent investment strategy. This has ultimately enabled us to deliver this excellent outcome for former Vickers employees.”
Legal & General head of core pension risk transfer, Phill Beach, added: “We are delighted that the Vickers trustees chose to work with Legal & General and ultimately secured their members’ benefits with us. We were pleased to work with Rolls-Royce, the Vickers scheme and their advisers on what proved to be a very smooth transition.
“The relationship with LGIM as investment manager enabled us to be innovative in offering certainty to the scheme during the transition period and this proved to be beneficial to everyone against the backdrop of volatile markets. This is a significant transaction which demonstrates that with strong company backing and a trustee who manages risk well the objective of buyout is fully achievable even when markets appear volatile.”
Mercer UK leader, bulk pensions insurance advisory and trustee adviser, David Ellis, said: “Mercer is delighted to have helped the trustee complete this major transaction, despite seemingly harsh financial conditions. It is a great demonstration of the excellent results that can be achieved by taking a holistic view of pension scheme risk and having the confidence to push for the full desired outcome”
