Aon advises Rolls-Royce UK pension fund on largest ever bulk annuity transaction

Aon advises Rolls-Royce UK pension fund on largest ever bulk annuity transaction

Aon has advised the 76,000-member Rolls-Royce UK pension fund on Legal & General’s partial buyout of its liabilities, worth in excess of £4.6 billion.

The buyout, the largest ever in the UK, covers around 33,000 members and includes transferring to Legal & General the Rolls-Royce pension fund’s existing £3 billion longevity swap, on which Aon advised in 2011.

Aon advised the trustee throughout this transaction, both as its scheme actuary, and insurance and longevity adviser.

Liz Airey, chairman of the trustee of the Rolls-Royce UK pension fund, welcomed the buyout as a means to “provide greater security and certainty around the retirement benefits our members have been promised”.

“This has been made possible by careful risk management over many years and a strong collaboration between the trustee, Rolls-Royce and our advisers.”

Martin Bird, senior partner and head of risk settlement at Aon, added: “This transaction is testimony to what can be achieved when there is a willingness to explore bold solutions with a keen focus on member security.”

“I would congratulate the trustee and Rolls-Royce on their careful management of the funding position over many years, which has improved the security of member benefits, culminating in the ability to achieve the largest ever pensioner buyout.”

“We are, of course, very pleased to have had the opportunity to support the Trustee on this ground-breaking transaction”

John Baines, partner in Aon’s risk settlement group, said: “In an extremely busy settlement market, the ability to secure a buyout of this magnitude at an attractive level of pricing—incorporating the longevity swap novation and significantly simplifying the residual fund—reflects the hard work of an extremely collaborative working group. The size of the transaction further underlines the appetite of the insurance market and we expect to see a number of large scale deals during the second half of 2019.”

Categories: News, UK Pensions

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