The Rolls-Royce Group pension schemes are long standing clients of Legal & General Investment Management (LGIM) which manages around £12 billion of assets on the schemes’ behalf. LGIM have supported the Rolls-Royce pension schemes throughout their de-risking journey and the buyout announced today saw the culmination of the Vickers scheme’s journey as it achieved its goal of full buyout.
Working in partnership with the Scheme and its advisors at Mercer, Legal & General provided a smooth transition and the price certainty that the trustees required. Through an innovative price-lock mechanism and an efficient transition of assets, Legal & General ensured the trustees’ and the company’s objectives were met. This was made possible by virtue of the assets being managed by LGIM and the approach the trustees have taken in de-risking their asset portfolio to date.
The end result was that the Scheme has been able to achieve a full buyout. This is a fantastic result in a period that has seen challenging news for pensions and members in general and a change to the insurance regulatory regime through the introduction of Solvency II.
Comment from Phill Beach, Head of Core Pension Risk Transfer at Legal & General: “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.”
Comment from Kerrigan Procter, Managing Director of Legal & General Retirement: “We look forward to welcoming the 11,000 members of the Vickers Group Pension Scheme to Legal & General. We are pleased to have worked closely with the Scheme trustees, their advisers Mercer, and Rolls-Royce Group to achieve a full buyout. Our relationship with the trustees has been a long-standing one, starting in 2007 with an LDI mandate to de-risk the Scheme and now culminating in a full buyout. We are grateful for being able to play a part as the trustees, with patient and careful management, steered their way through the financial crisis, recession, the consequences of QE and latterly the outcome of the EU referendum before reaching the point where buyout was appropriate and achievable for all Scheme members.”
Comment from Joel Griffin Head of Pensions at Rolls-Royce: 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.
Comment from David Ellis, trustee adviser and Mercer UK leader, Bulk Pensions Insurance Advisory. “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”
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