“The pre-eminent pensions-related firm in the UK. They have
the broadest and deepest resources in the field.”
Chambers
Pension schemes are increasingly exploring how they can transfer the risks associated with their DB pension arrangements, whether to an insurance company, superfund, consolidator or through a longevity transaction. Recent years have seen unprecedented increases in risk transfer activity and we have advised on some of the most significant transactions. Our specialist team supports trustees and employers in achieving successful results and ultimately securing the best possible outcomes for members.
A buy-in is likely to be the most important transaction a pension scheme trustee or employer makes for their scheme, and high quality legal advice is a key component of a successful transaction. We have been involved in the bulk annuity market from its infancy, and our team has consistently advised on around 30% of buy-in/buy-out transactions by value in recent years. We bring a deep understanding of the legal issues and risks, particularly around benefit specification, document review and trustee protections, and have worked closely with all of the main insurers and consultants. In addition, we have deep experience with illiquid assets arising from alternative asset structures, ongoing secondary sales exercises and multi asset transfer exercises. A significant proportion of our larger derisking transactions now involve some form of engagement with illiquid assets. Above all, we guide our clients through a transaction from start to finish. Drawing on the vast pensions experience from across our practice, our team don’t just focus on the narrow transaction window, but on the early preparation stage and, crucially, the full wind-up solution.
Although the field is evolving, many pensions longevity transactions are highly bespoke and serviced by a specialised market, relying on an elite selection of practitioners. We are proud to be in that company, having advised on some of the earliest transactions. We have over a decade of experience working on these complex risk transfer transactions and in the last four years alone, we have assisted our clients with longevity swaps totalling over £13bn.
DB consolidation continues to gain traction and ranges from shared services and asset pooling to single governance models such as DB master trusts or transfers to DB superfunds, where the link with the sponsoring employer is cut. The superfund market is in its infancy but our team is actively involved in the first-wave of transactions. In November 2023, we advised Sears Retail Pension Scheme on the UK’s first ever superfund transaction with Clara-Pensions. In addition, we have advised on several transfers to DB master trusts, and our broad experience advising pension scheme trustees, together with our industry involvement and expertise in general risk management solutions, means we are well placed to advise in this nascent area.
Completing a buy-out or other risk transfer transaction is not the end of the scheme’s journey. Scheme wind-up can itself prove complex and challenging, with many multi-layered areas to be addressed. Our team is highly experienced at navigating the road to wind up efficiently for trustees, seeing the buy-out journey to completion.
Trustees should consider their position and protections both during the buy-out and beyond. With the development of the trustee insurance market leading to fewer players and more carve-outs, trustees are thinking more about their future protections as part of any scheme exit. Our team is highly skilled at assisting trustees in navigating the statutory wind-up framework, sponsor indemnities, residual risk cover and analysing scheme rules to ensure they are fully discharged from future liabilities.
To find out more about our risk transfer expertise and how we can help you, please contact Ralph McClelland.
