he transaction, which signed in December 2016 covers around three quarters of the pensioner liabilities in the Scheme and is one of the most significant deals completed by Just since the merger with Partnership Assurance in April 2016. The Trustees took advantage of favourable pricing available at the end of 2016 to optimise their low risk assets. Hymans Robertson was the lead adviser to the Trustees, with Sackers providing advice on legal aspects.
The transaction was completed in a little more than 2 weeks following the Trustees’ decision to proceed. This required careful co-ordination and project management to ensure that all of the many workstreams were completed at the right time in order to achieve a successful transaction. A medical underwriting exercise will take place after completion of the transaction which provides potential to deliver improved terms to the Trustees.
Just showed innovation by tailoring the buy-in to reflect the inflation risk appetite of the Trustee and also demonstrated flexibility should the Trustees inflation risk appetite change in the future. By structuring the transaction in this way, the Trustees were able to focus on transferring those risks that offered best value.
Commenting on the transaction, Tim Coulson, Director of Defined Benefit Solutions at Just said: “We are very pleased to have successfully completed this significant transaction with the Scheme. Working closely with their advisers, the Trustees were able to move from a decision to go ahead to signing the contract in one of the shortest periods that we have seen. This is an excellent example of how those pension schemes that are well prepared can achieve excellent outcomes in the bulk annuity market.”
Peter Frackiewicz, Chair of Trustees said: “We are very pleased to have taken this important step in managing risk within our scheme, gaining protection against demographic risks and a source of income that will help us meet our benefit payments with a reduced need for divesting assets in order to do so. Hymans Robertson’s expert assistance and advice helped us complete our transaction smoothly and efficiently, securing excellent value for us by closing the deal within a very short timeframe. We are also grateful to Just, who worked closely with us and our advisers and showed flexibility to develop solutions to accommodate our requirements. This helped us conclude the transaction efficiently and smoothly.”
James Mullins, Partner and Head of Risk Transfer Solutions, Hymans Robertson said: "We are delighted to have helped the Trustees successfully complete their first buy-in. Buy-in pricing compared to other low risk assets such as gilts is at the most attractive level in several years offering some great opportunities for pension schemes. We expect these favourable conditions to persist over 2017. We expect to see many more pension schemes transferring risk using buy-ins over the coming year.”
“Hymans Robertson has now advised 10 FTSE100 sponsored pension schemes on successfully completed buy-in, buy-out and longevity swap transactions, including six as the lead risk transfer adviser.”
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