Independent and expert oversight to deliver a successful buy-out

Background

The sponsor, a global industrial and services firm, was clear from the outset that as part of a process to restructure its business, it needed to remove pension obligations from its balance sheet by a deadline two years after fully insuring all benefits through a buy-in, linked to the sponsor’s year-end.  

The scheme already held two other significant pensioner buy-in policies each with a different insurer.  

It faced several common challenges including complex data cleanse issues (GMP rectification and equalisation), DB and DC hybrid benefits with an underpin, more than a hundred historic individual annuity policies, and AVCs with a variety of providers to rehouse.  

Our solution

For this project, given the complexity, challenging timescales and number of parties involved, the Trustee, with support from the Sponsor, appointed LCP to deliver the project on time.   

Our post-transaction team: 

• Was independent of the incumbent advisers – we provided constructive challenge, enhanced oversight and day-to-day guidance to administrators to make sure all tasks were delivered within the required timescales, whilst meeting all necessary requirements.  
• Used our strong track record of delivering buy-out projects with many concurrent workstreams; we worked collaboratively with all parties to confirm objectives, develop a clear plan and pre-empt issues that might otherwise have derailed the timings.  
• Worked closely with a professional trustee that was extremely hands-on throughout the process, enabling faster decision-making and issue resolution and ensuring the project stayed on schedule 
• Built a strong team on the Trustee side and leveraged our relationship with the primary insurer, who had provided commitments from the outset to work to much tighter than standard timescales, including direct input from their senior leadership when needed.  

It was an exceptional effort from all involved to achieve this within two years, against a backdrop of typical timescales of three years or more for similarly complex projects. This was only possible thanks to the positive and collaborative approach from all parties including the trustees, sponsor, insurers, administrator, actuaries and other advisers.  

Results

Members received individual policies as planned, ahead of the sponsor’s year-end.  

The sponsor is now in a position to restructure the business in line with the timelines it communicated to stakeholders, putting it in a strong position to pursue its strategic objectives with pension liabilities removed from the balance sheet.  

Trustee liabilities were discharged with suitable protections for the trustees, and the scheme is now fully wound-up.