How Rolls-Royce’s ground-breaking transaction has raised the bar on member experience

Monday saw the announcement of Rolls-Royce’s £4.3bn full buy-in with the Pension Insurance Corporation (PIC) – the largest buy-in to be announced since 2023 and, together with the Fund’s £4.6bn partial pensioner buy-out in 2019, it is the largest scheme ever to reach full insurance.

However, size isn’t the only notable point of this transaction – member experience was the primary consideration for every facet of this deal.

We are seeing trustees increasingly focus on member experience as part of their endgame considerations. For those considering insurance, schemes are expecting more from insurers, with member experience core to selection criteria. After all, with strong funding positions and a wider choice of endgame options, big schemes – such as Rolls-Royce – quite rightly want a positive impact on member experience if they are to choose the insurance route.

There is a view from some that insurer bulk annuity administration is, on the whole, stronger than own-trust administration, reflecting the scale and investment by insurers into their operations. However, this does not necessarily follow for big schemes who have invested heavily themselves. The Rolls-Royce in-house administration team provide a best-in-class service to their members with functionality not offered by insurers. Maintaining this level of service through a buy-in and any future buy-out was viewed as a minimum requirement and drove structuring and strategy throughout.

In a market where ‘member first’ is increasingly talked about, the Rolls-Royce deal has set the blueprint for other schemes and it was great to see insurers stepping up to meet the requirements set. In this article we explore what we are seeing in practice and our top tips for how schemes can achieve the best outcome for their members.

How are insurers stepping up to meet Trustee requirements?

Member experience is really starting to drive the buy-in market, with pressure from both sides – trustees have higher expectations, and insurers want to differentiate their offerings in a highly competitive market. In many cases, it is no longer good enough to simply offer the most competitive price as schemes are sitting on surpluses and so have the option to shop around (or run-on if their requirements are not met).

Trustees want to provide services such as independent financial advice, websites that allow members to self-serve, and to share educational materials in plentiful formats.

They want to know that the insurer will look after their members, and will take member service seriously. The FCA’s Consumer Duty requirements which came into force recently are raising the bar, but trustees are driving innovation.

We are also seeing a change in how trustees consider the impact on members. Gone are the days of accepting that the average member is better off and all members are benefiting from an improvement in security – trustees are approaching a transaction through the eyes of every member, and paying close attention to the potential cliff edge cases for members with niche circumstances.

Insurers are rising to this challenge from schemes. LCP has negotiated a range of changes to standard insurer offerings to meet specific client requirements in recent transactions. Some key improvements we have negotiated include:

• Member benefits - replicating current benefit options, such as bridging pensions, pension increase exchanges, tailoring dependant definitions to match scheme practice, or incorporating employed deferreds who are entitled to certain service-linked benefits.
• IFA - a willingness to implement an independent financial advice offering for members. This follows the lead of Just and its partnership with HUB.
• Online modellers - improving web offerings to allow members to model options such as different retirement ages or amounts of tax free cash, and retire online.
• Member options - insurers are becoming more flexible in their long-established factor processes, offering factor tools, holding factors for a month and simplifying approaches for setting factors to be more in line with how schemes have typically set them. This can enable schemes’ existing online modellers and processes to be maintained during buy-in – as continuity of service during the buy-in period is also becoming a dealbreaker.
• AVCs - developing enhanced solutions to allow members to still access a wide range of investment choices and use AVCs or DC benefits as a first source of tax-free cash at retirement.
• In-house teams - ensuring continuity of service, through a transfer of strong in-house administration teams to insurers (such as in the case for LCP-advised British Steel Pension Scheme whose Glasgow admin team transferred to L&G). This of course also helps insurers scale up their teams with knowledgeable and experienced administrators, who are in high demand.

How will you achieve this for your members?

If you want to run a member-first process, we’ve set out our ‘top tips’ below:

• Align stakeholder objectives: All parties need to be aligned from day one. Set clear objectives at the outset, without being overly prescriptive or detailed.
• Be flexible to different solutions: Insurers should be given the flexibility to meet scheme objectives in different ways – don’t inadvertently rule out a good solution; the insurers may surprise you with what they come up with!
• Clear articulation of ‘asks’ up-front: State your “must haves” clearly at the outset with time for insurers to tailor solutions and focus on priorities. A unique request can require significant investment from insurers, so it’s vital that the insurer understands the request and has confidence that the transaction will proceed.
• Set out a clear rationale: Provide a strong rationale for requests, especially where these are outside of an insurer’s usual offering. Particularly for larger transactions, insurers are willing to commit time and resource ahead of exclusivity but they need trust in the process and time to get to their best position.
• Consider post-transaction from the outset: Trustees should treat pre-transaction and post-transaction as one project, with a contract signed halfway through. Your members won’t get a seamless service if post-transaction is an afterthought.
• Appointing an experienced adviser early in the process will help achieve the best outcome. LCP acts as lead adviser on more big transactions than any other adviser¹ and around half of them are specialist appointments for risk transfer only – such as Rolls-Royce. LCP is normally appointed at an early stage to provide expert input into the endgame strategy and preparation. Preparation work such as identifying challenging benefits and workshopping scenarios can help align all stakeholders, and mean the scheme is able to transact quickly when the time comes.

What’s next?

Whilst the innovation seen as part of the Rolls-Royce deal was, in part, possible due to the size of the transaction and strength of the brand, it has proven that there is flex in insurers’ standard processes. Pleasingly some of these developments are now being rolled out more widely to deliver better member outcomes. The mega-deals are helping pave the way for an improved member offering for all schemes, no matter the size.

David Fink is a Partner in LCP’s Pension Risk Transfer (PRT) team and advised the Rolls-Royce Trustee on its recent buy-in. Katie North-Walker is a Senior Consultant in LCP’s PRT team and specialises in providing advice relating to member experience.

This article was first published in Professional Pensions on 14 August 2025

<sub>Footnote
1. LCP was lead adviser on 7 out of the 14 £1bn+ buy-ins in 2024</sub>