Pension schemes are increasingly exploring how they can transfer the risks associated with their DB pension arrangements, whether to an insurance company, superfund, consolidator or through a longevity transaction.
The last six years have seen an unprecedented increase in risk transfer activity and 2021 was another record-breaking year for the industry. We have advised on some of the most significant transactions including the largest buy-in of 2020.
Our specialist team support both trustees and employers to achieve successful results and ultimately secure the best possible outcomes for members.
Transactions over £100m which the team advised on last year can be seen here.
A buy-in is likely to be the most important transaction a pension scheme trustee or employer makes for their scheme, and top flight legal input is a key component of trustee diligence. Sackers have been involved in the bulk annuity market from its infancy: as a leading pensions practice, we have had to be.
Today our practice had grown so that our team have consistently advised between 20-30% of buy-in / buy-out transactions by value in recent years. For our clients, this means:
- market leading transaction experience – we can guide you through the transaction from start to finish
- market penetration – we have worked with all of the main insurers and consultant brokers operating in this market place
- risks focus – a deep understanding of the legal issues and risks, particularly around benefit specification, documentary review and trustee protections
- start to finish – drawing on the deep pensions experience from across our practice, our team can assist trustee and employer clients not just with the narrow transaction window, but with the early preparation stage and, crucially, the full wind-up solution.
Although the market is evolving, many pensions longevity transactions are highly bespoke and serviced by a specialised market, drawing on an elite selection of practitioner. We are proud to be in that company, having advised on some of the earliest transactions in the market and continued to advise on significant transactions in succeeding years. Our longevity practice draws on leading industry expertise earned over 15 years and in the last three years alone, we have assisted our clients with longevity swaps totalling £10bn.
Our team has extensive experience on DB consolidation and superfunds. DB consolidation continues to gain traction and ranges from shared services and asset pooling, to single governance models such as DB master trusts or transfers to DB “superfunds” (where the link with the sponsoring employer is cut). The superfund market is in its infancy and our team are actively involved in the anticipated first wave discussions for superfund transactions. We have advised on several transfers to DB master trusts. Our broad experience advising trustees of pension schemes, together with our industry involvement and expertise in general risk management solutions means we are well placed to advise trustees and employers interested in this developing area.
Completing a buy-out or other risk transfer transaction is not the end of a scheme’s journey. Scheme wind-up can itself prove complex, timely and challenging, with many multi-layered areas to be considered. Our team are highly experienced at navigating the road to wind-up efficiently and effectively for trustees, seeing the buy-out journey to completion.
Trustees should consider their position and protections both during buy-out and beyond. With a developing of the trustee insurance market with fewer players and more carve outs, trustees are thinking more about their future protections as part of any scheme exit. Our team are highly experienced at assisting trustees in ensuring they are fully discharged from future liabilities and navigating the statutory wind-up framework, sponsor indemnities, residual risk cover and analysis of the rules of a scheme.
Meet the team
I’ve been at Sackers for 30 years now and in this time I’ve covered the full range of finance and investment issues across DB and DC. I’ve advised my clients on major restructurings of investments, their investment strategies, and more recently complex longevity swap transactions including one of the largest ever deals for a UK pension scheme. I enjoy helping my clients with practical, straightforward advice to keep their investment projects on track and looking for innovative solutions to their issues.
I have advised trustees and employers on pensions issues for over 20 years. I was fortunate to be involved in some of the earliest major bulk annuity and longevity transactions and have maintained a strong focus on risk transfer transactions since then, working on a number of significant and novel structures in the past few years. Those experiences and my background in both pensions and investment work means I have a deep understanding of all aspects of these transactions from preparing benefit specifications, negotiating contracts and advising on residual risks. I enjoy helping find pragmatic solutions and guiding clients through the legal aspects of what is, ultimately, one of the most important investment decisions that a trustee board is likely to make.
Since I joined Sackers in 2003 I’ve grown my specialism in finance and investment issues, with a major focus on buy-ins and buy-outs, de-risking and scheme funding, including the use of contingent assets. I really enjoy the varied scope of work this brings me and the contact with clients. My passion lies in ESG issues and I’ve headed up the firm’s industry presence in this area, advising our clients on the ever-evolving regulations around their fiduciary duties, policy, stewardship, responsible and impact investing.
I have been working in pensions for 15 years now, with a focus on pensions finance and investment projects. I was drawn to this work because of the opportunity to take part in transactions with a range of managers, consultants and insurers. As buy-in, buy-out and other risk transfer options have become an increased priority for my clients, I’ve developed a particular focus on these areas and have been lucky to work on some of the biggest projects in the market in recent years.
I love a good project, partly because they offer the opportunity to make real progress for the client, and a risk transfer project is certainly no exception. I always aim to get a really clear understanding of the objectives at the outset, and to keep everyone’s eyes on the prize as the project unfolds.
Risk transfer can be complex. I want my clients to be able to focus on what’s important to them, and I think that means providing pragmatic, commercially-focussed advice and ensuring that the finer detail is taken care of behind the scenes.
I am a finance and investment specialist and have been part of the Sackers team since 2019. Prior to joining, I worked on the provider side for nine years advising on structured finance, derivatives, financial regulation and risk transfer transactions. I love working as part of a collaborative team on larger projects and aspire to reflect the Sackers’ ethos of delivering quality advice under pressure and focusing on the most important points for the client. I have advised on pensions risk transfer transactions since 2013, beginning with longevity swaps and subsequently broadening out to advise on buy-in and buy-out transactions.
Our risk transfer team have advised on some of the most significant transactions in the market. Visit our case study page here.
- Advising the trustees of the Mowlem (1993) Pension Scheme on a £150m PPF+ buy-out transaction, securing the benefits of over 360 deferred members and 650 retirees.
- Advising the trustees of the National Grid UK Pension Scheme on a £800m buy-in with Rothesay Life.
- Advising RockRose Energy (Marathon Services (GB) Limited Pension and Life assurance scheme) on a £610m buy-in Rothesay Life.
- Advising the trustees of the Siemens Benefits Scheme on a £530m buy-in with L&G.
- Advising the trustees of the Smiths Industries Pension Scheme on a £146m buy-in with Canada Life.
- Advising the trustees of the TI Group Pension Scheme on a £142m buy-in with Aviva.
- Advising the Trustee of HSBC Bank (UK) Pension Scheme on a £7bn longevity swap with PICA (the second largest ever deal for a UK pension scheme).
- Advising the trustees of the Smiths Industries Pension Scheme on two buy-outs with Canada Life for £210m and £176m respectively.
- Advising Groupe PSA (company) on the Peugeot Advanced Pension Plan’s £140m buy-in with Scottish Widows.
- Advising the trustees of the Reuters Pension Fund on their £625m buy-in with Canada Life, the insurers largest ever deal.
- Advising the Trustee of the Siemens Benefit Scheme on their £1.3bn buy-in with PIC.
- Advising the Trustee of the Royal Mail Pension Plan, Post Office Limited section, on their £450m buy-in with Rothesay Life.
- Advising the Trustee of the Tullet Prebon Pension Scheme on their £270m all-risks buy-in with Rothesay Life.
- Advising the Trustee of the Cancer Research Pension Scheme on their £250m buy-in with Canada Life.
- Advising the Trustee of the Blackwell’s Pension Fund on the transition of the buy-in transacted in 2015 to a full buy-out with PIC and a wind-up of the scheme which completed in June 2017.
- Advising the trustees of the Northern Bank Pension Scheme on a £680m buy-in with Prudential, putting in place a collateralised security structure.
Signet Group Pension Scheme completed a £236m full scheme buy-in with Rothesay Life
“We are delighted to have worked with our sponsoring employer to secure the pension benefits for all our members. I would like to thank Sackers for their constructive input and advice throughout the transaction. It is a great outcome for our members and has resulted from a really positive and successful collaboration between all those involved.”
Alan Baker, Chair of Trustees, Signet Pension Scheme
GEC 1972 Plan (sponsored by telent) completed a £4.7bn buy-out with Rothesay Life
“Sackers provided excellent support to the trustees during the process, as they have done over many years.”
Brian Duffin, Chair of Trustees, GEC 1972 Plan
HSBC Bank (UK) Pension Scheme closed a £7bn longevity swap with PICA
“Sackers in-depth knowledge of the scheme, as well as their clear and responsive advice, enabled the Trustee to overcome significant obstacles to complete the deal and secure members’ benefits.”
Richard Williams, HSBC Pension Scheme Executive
AIB £1.1bn buy-in and assured payment policy
“These transactions represent a major milestone in derisking the Scheme and are the result of a collaborative process between the Bank and the Trustees over many years. Neither would have been possible without the constructive input and clear advice of Sackers, our long-standing legal advisers, whose experience of these transactions instilled confidence and helped us to achieve our objective of improving the security of members’ benefits.”
Norbert Bannon, Chair of Trustees, AIB
Electricity North West Group completed a £805m pensioner buy-in with Scottish Widows
“The Group’s funding level has improved significantly in recent years and this transaction allows us to lock in some of that positive performance providing security to our members and other stakeholders. Sackers effective and expert advice enabled us to successfully deliver the buy-in.”
Malcolm Sugden, Chair of Trustees, Electricity North West Group of the ESPS
Siemens Benefit Scheme secured the benefits of around 6,000 members in its DB scheme through a £1.3bn buy-in with Pension Insurance Corporation
“We have the highest regard for the help Sackers gave us during our project. They worked collaboratively with our other advisers and drew on their extensive knowledge of the buy-in market to provide us with high quality advice within the tight timescales required to complete our transaction.”
Joanna Matthews, Chair of Trustees, Siemens Benefits Scheme
Reuters Pension Fund completed a £625m full pensioner buy-in with Canada Life
“Working with Sackers as our legal advisers, our actuary (Aon) and investment manager (Redington), the trustees devised a progressive buy-in strategy for the Reuters Pension Fund which culminated in the successful execution of a £625m buy-in with Canada Life in August 2018, securing those liabilities and removing their risk from the scheme. I’d have no hesitation recommending our team to other trustees. Sackers did a great job working with the many parties involved; as well as excellent preparation of our negotiating position, their work in the final hiatus before contract signing was an essential contribution to the successful outcome.”
Greg Meekings, Chair of Trustees, Reuters Pension Fund