Minister backs innovation in DB pensions market and signals FAA reform after landmark Stagecoach deal
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Today, the Pensions Minister has released a statement regarding the legal mechanism used to execute the transfer of the Stagecoach Group Pension Scheme to Aberdeen in December 2025.
LCP advised Stagecoach on the transaction, which is expected to materially boost member outcomes.
In response, the Minister states: "We want to encourage innovation that has the potential to benefit scheme members throughout the pension system and need to ensure the right legislative guard rails are in place for this to happen safely".
We welcome both aspects of this statement, which captures the ethos of the process that sat behind the transfer of the Stagecoach Group Pension Scheme to Aberdeen.
The Stagecoach transaction used an FAA (Flexible Apportionment Arrangement) to transfer the sponsorship of the DB scheme to Aberdeen. The Minister also announced a plan to "consult in due course on whether and how existing FAA regulations could be strengthened".
Commenting, LCP Partner Steve Hodder who led LCP's advice to Stagecoach:
“We are supportive of having the right pragmatic safeguards in place to support the interests of scheme members, which mirrors how the Stagecoach process was advised and run. We therefore welcome the DWP taking action to consider how to “level up” the formal requirements sitting behind FAAs – to ensure that schemes following the Stagecoach route manage the interests and potential risks as thoroughly as in this pioneering case, alongside giving members the potential to benefit from improved outcomes.
“Innovation, choice and competition can be a real positive for consumers. It's great to see the Pensions Minister embracing that, and the potential for the UK's DB schemes to improve outcomes for all stakeholders.”
