Our risk transfer team has advised on some of the most significant transactions in the market. Read some case studies below.
We advised the trustees of the £590m Sears Retail Pension Scheme on their agreement to enter into the UK’s first ever superfund transaction with Clara-Pensions. Clara was established in 2018 and operates a “bridge to buyout” model – aiming to use benefits of scale to reduce costs and invest appropriately in preparation for a future buy-out with an insurance company.
Significance: This was the UK’s first ever superfund transaction. It will see Clara inject £30m of ring-fenced funding to support the 9,600-member scheme and provide a funding buffer. The result will be better member security and increased certainty about their journey to an insured buy-out, which remains the gold standard for any pension scheme member.
Our role: We are longstanding advisers to the Sears Retail Pension Scheme and advised on each stage of this first-of-a-kind transaction.
“As long-standing advisers to the Trustees, Sackers’ knowledge of the Scheme combined with their risk transfer expertise were invaluable.” Michael Chatterton, chair of trustees, Sears Retail Pension Scheme
We advised the trustee of the Sal Pension Scheme, sponsored by RSA Insurance Group, on the largest bulk annuity transaction of 2023, insuring a total of £6.5bn of liabilities with PIC and covering the pensions of 40,000 members. We also provided specialist advice to the trustee of Royal Insurance Group Pension Scheme, also sponsored by RSA, on certain aspects of the transaction.
Significance: This landmark transaction, ensuring enhanced security of our clients’ members’ benefits, paved the way for other very large transactions which followed in 2023. As the largest risk transfer transaction yet seen, it involved numerous innovative structures and approaches and was closely watched by the whole industry.
Our role: This transaction was highly complex with significant sensitivities and commercial value. The transaction called for a full-strength team and involved Sackers’ general pensions experts together with specialists in risk transfer, derivatives and investments. Sackers worked closely with the trustees of both the Sal Pension Scheme and the Royal Insurance Group Pension Scheme, the sponsor and other advisers. This was against the backdrop of the unprecedented market volatility during the LDI crisis. We played a key role in the negotiations from start to finish and advised on a raft of novel and complex aspects of the transaction.
“This landmark transaction would not have been possible without the excellent support from all the team at Sackers who showed resilience, commerciality and determination to get the deal signed.” Ray Cox, chair of trustees, SALPS
We advised the trustees of the Rexam Pension Plan on a £1.4bn full scheme residual risks buy-in with Rothesay for this highly complex multi-section scheme.
Significance: This was a hugely complex transaction with many moving parts and multiple stakeholders. The insurers who quoted for the project stated that the transaction had the most complex benefit structure they had ever had to model. Sackers adopted a novel approach to the benefit specifications and residual risk in relation to smaller benefit categories to allow the transaction to progress at speed. In addition, we also prepared and shared an extensive vendor due diligence report on the scheme prior to going exclusive with an insurer, to enable the insurers to engage in shorter timescales and to leverage commercial tension to get the best residual risks deal for the trustee.
Our role: Sackers played a pivotal role from the outset. We prepared a large number of benefits specifications for insurers to provide their insurance pricing, and carried out a full vendor due diligence exercise to support negotiation of residual risks coverage from inception of buy-in. We acted as sole legal adviser to the trustees on the complex contract negotiations with Rothesay and also advised on legal aspects of the asset transition.
The project involved a large team at Sackers including our risk transfer/contract negotiation, asset transition and general pensions advisory teams.
We advised the trustee of the Boots Pension Scheme on its landmark buy-in with Legal & General insuring in total £4.8bn of liabilities and covering the pensions of all 53,000 retirees and deferred members of the scheme.
Significance: This is the largest ever single transaction by premium in terms of number of members. Not only did our client secure all members’ benefits but the significance of the transaction extends to the wider pensions market in breaking new ground for risk transfer transactions. It is, at the time of writing, the largest ever single pensions risk transfer transaction written by Legal & General and includes complex asset transition and deferred premium features.
Our role: Sackers guided the trustee through the transaction including providing advice in relation to the transaction structure, providing detailed input into recording scheme benefits, negotiating a suite of voluminous legal documentation (with both the sponsor and insurer) and ultimately advising on the trustees’ decision making.
“The legal aspects of this transaction were complex and numerous. Your work was impressive and the support provided by all members of the Sackers’ team from start to finish was unbelievable.” Steve Jones, Head of Pensions, Boots UK
We advised the trustee of Northern Bank Pension Scheme on its £286m bulk annuity transaction with M&G Subsidiary Prudential Assurance Company.
Significance: This transaction secured the benefits of 1,917 members of the scheme. The transaction marked the re-entry into the bulk annuity market of Prudential after an absence of six years. Innovative solutions were used in relation to the scheme’s illiquid investments.
Our role: Sackers worked closely with the trustee and its other advisers to enable the scheme to take advantage of favourable derisking conditions and achieve a full buy-in several years ahead of expectations. This was the second transaction the scheme had signed with Prudential, following a pensioner only buy-in in 2015. The transaction involved the transfer to Prudential of some illiquid investments held by the trustee and an innovative back-to-back funding agreement with the scheme’s employer enabling the transaction to proceed whilst certain other illiquid investments are run off by the scheme.
We assisted the trustee of the Cobham Pension Plan on a £530m buy-in with Standard Life, securing the benefits of around 3,000 members. The transaction completed in August 2022 and followed a previous bulk annuity purchase of £280m with Rothesay Life in 2013.
Significance: As a result of both of these transactions the all scheme members’ benefits are now secured.
Our role: Sackers was involved in ensuring the adequacy of the benefit specification and the potential residual risks involved in the transaction, working collaboratively with the trustee and the scheme’s other advisers. Our lawyers were able to draw on our significant risk transfer transaction experience and expertise to ensure a successful outcome for the trustee.
We advised the trustee of the EDS 1994 Pension Scheme on its £1.1bn buy-in with PIC to fully insure the scheme’s pension liabilities.
Significance: One of 2022’s largest bulk annuity transactions. The buy-in agreement provided certainty and security for all the scheme’s 3,000 current and 2,300 deferred pensioners and was secured in anticipation of a full scheme buy-out. The transaction involved innovative restructuring to enable the buy-in to be converted to a buy-out and to allow the trustee to distribute surplus to another section of the scheme for the benefit of new members.
Our role: Sackers worked closely with the trustee, sponsor and other advisers to provide certainty and security to the scheme’s current and deferred members.
“Sackers took the lead to ensure all advisers worked to a well thought-out plan to deliver the project on time. Their knowledge and expertise were second to none.” Ian Wilson, chair of trustees, EDS 1994 Pension Scheme
• We advised the YCB Pension Scheme on its longevity swap transaction with Pacific Life Re International Limited (PL Re) and Zurich Assurance Ltd to manage longevity risk in relation to c£1.6bn of pensioner liabilities. Under this complex and innovative pass-through structure, PL Re assumes 100% of the longevity risk associated with around 9,000 members of the scheme and the trustee and PL Re take on mutual credit risk exposure to each other.
• We advised Nationwide Pension Fund on a major longevity risk transfer transaction with Zurich Assurance Ltd and Prudential Financial Inc, transferring the longevity risk of approximately £1.7bn of pension scheme liabilities covering approximately 7,000 members. The transaction was set up to ensure that the longevity risk of the pension scheme relating to these members will be passed through to Zurich UK, to an insurance subsidiary of PFI as the reinsurer.
• We assisted two pension schemes sponsored by United Utilities, the United Utilities Pension Scheme and the United Utilities PLC Group of the Electricity Supply Pension Scheme, on a £1.8bn buy-in with Legal & General. This high-value, complex and significant buy-in ensured that the majority of members’ liabilities were insured for both schemes.
