Stagecoach Group Pension Scheme to be transferred to Aberdeen

It has been announced that Aberdeen Group has agreed to replace Stagecoach as sponsoring employer of the £1.2bn Stagecoach Group Pension Scheme. 

This agreement follows an extensive process of considering endgame options for the Scheme, where LCP has advised Stagecoach on its options and the commercial aspects of this transaction.

Under the arrangement the Scheme, which benefits from a strong surplus position, will continue to ‘run on’.  Aberdeen will take on responsibility for the Scheme’s funding as well as the management of the Scheme’s assets.

The arrangement is expected to bring significant benefits to the Scheme’s 22,000 members.  It has been designed to seek to ensure long-term security for the Scheme, with robust guardrails that protect the Scheme’s financial security.  Members will also benefit from an initial uplift to all benefits and better inflation protection.  Furthermore, the arrangement will also offer the prospect of further pension increases for Scheme members in the future, generated by Aberdeen investing in productive assets (with Aberdeen receiving a minority share of any surplus generated).

This innovative transaction supports the Stagecoach Group’s objective of simplifying its business through settling its arrangements with the Scheme and ensures the interests of pension Scheme members and Aberdeen are closely aligned.

It follows Aberdeen’s decision earlier this year to run on its £2.6bn DB pension scheme, with surplus unlocked for the benefit of Aberdeen and the scheme’s members.

LCP Partner and lead adviser to Stagecoach, Steve Hodder, commented: “We are delighted to have helped Stagecoach reach their pensions destination, with an innovative solution that is expected to deliver a meaningful boost for 22,000 members. This example highlights a continuing trend of well-funded DB schemes being viewed as “an asset” for their members and sponsor, in the right circumstances.” 

LCP Partner and Head of LCP’s corporate consulting practice,  Gordon Watchorn, added:  “This is an excellent and innovative solution given the specific combination of circumstances of this scheme. At a time of considerable change for DB pensions, this case reinforces the value of bespoke and innovative advice to ensure our clients reach the best outcome given their objectives.”