Rothesay, the largest specialist annuity provider in the UK, is pleased to announce that it has completed a £230m pensioner buy-in transaction with the Aberdeen City Council Transport Fund (“The Fund”).
The transaction insures the pension payments of 1,360 retired FirstGroup employees through a pensioner-only buy-in. The buy-in is the Fund’s first insurance transaction, securing £230m of its c£300m of pension liabilities. The Aberdeen City Council Transport Fund is only the second Local Government Pension Scheme to secure its pension obligations through an insurance policy.
The transaction was led by Mercer, acting for Aberdeen City Council, with Brodies providing legal advice to the Fund. Legal advice to Rothesay was provided by Linklaters.
Roisin O’Shea from Rothesay, said: “We are delighted that Aberdeen City Council chose Rothesay to protect their pensioners’ payments and allowed the Fund to complete this significant de-risking step. Despite all the uncertainties last year, we saw a continued focus on de-risking from pension schemes with 2020 looking to be the second largest year for the market.”
Laura Colliss from Aberdeen City Council, said: “We are very proud to be able to offer our members the protection to their pensions and peace of mind that this insurance policy provides. This transaction underscores the commitment to meeting the pension obligations and places the Fund and the tax-payer in a strong position for the future.”
Adrian Marshall, LGPS Risk transfer specialist from Mercer, said: “We are delighted to have worked with the Council to achieve this significant milestone in its long term plan to secure members‘ benefits and ultimately protect the tax-payer. We worked with the Council to devise a clear, well-structured broking and procurement process to maximise insurer engagement to secure the best deal for all stakeholders. By entering into this buy-in with Rothesay, the Council has minimised its exposure to future volatility on around three-quarters of the Fund’s liabilities.”
Ian Hodgson, Group Pensions Manager of FirstGroup said: “This buy-in is the culmination of a project to sustainably de-risk our Scottish LGPS Funds. After the successful merger of our obligations from the Strathclyde Pension Fund, this buy-in has removed £230m of pensions risk from the Company, securing the pensions for some 1,360 members in the process. Transactions with the insurance market are not commonplace in the LGPS, and we are grateful to both Rothesay and the Fund for their work in making this an attractive de-risking option for employers and funds alike."
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