On the go: Rothesay Life has agreed the largest buyout ever undertaken in the UK, with £4.7bn of assets and liabilities transferring to it from the GEC 1972 plan.
The agreement between Telent, the current sponsoring company, and the trustee of the GEC scheme secures the benefits of approximately 39,000 members made up of 28,000 pensioners and 11,000 deferred pensioners, many from Telent’s predecessors, Marconi and GEC.
The transaction will take place in two parts, with the buyout preceded by a buy-in. The buyout is expected to be completed before the end of 2022.
All of the current terms and benefits – including annual increases and all the flexibility, for example to allow members to take early retirement or take cash lump sums, will be replicated for all members.
Commenting on the transaction, Brian Duffin, chairman of the trustee board, said: “During its history, from its foundation up to this announcement, the GEC Plan has met its commitments to its members despite many changes and challenges.
“Over five years ago the trustee decided that the best way to provide maximum security for our members in the long term would be to achieve buyout. Thanks to support from our sponsor Telent, and to an innovative investment strategy based on credit assets, we are now close to achieving our target.”
Heather Green, chief financial officer of Telent, said: “The trustee of the GEC 1972 Plan has done a fantastic job to eliminate the significant funding deficit that existed in the plan only 10 years ago, and get the scheme to a position where it can benefit from the hugely, more secure future that this transaction provides. It is great news for all members of the scheme.”
She added: “For Telent, being the sponsor of a scheme many times larger than our business was not ideal. We can now look forward to focusing more of our investment in our already successful technology solutions business.”
The trustee board was advised by Aon and CMS, and Rothesay Life was advised by Gowling WLG.
Sackers was also the long-term legal advisers to the trustees.
Sammy Cooper-Smith, co-head of business development at Rothesay Life, said: “From our very first meeting with Telent, the trustee and Aon, they could not have been clearer as to what was required for the buyout to take place.
“This direct articulation allowed us to focus our resources and attention to meet these requirements and ensure the completion of the largest full-scheme buyout ever undertaken in the UK.”
Redington was the lead investment consultant for Stanhope Pension Trust, the corporate trustee of the plan.
Mette Hansen, director at Redington, said: “Over the past 10 years, the Stanhope Pension Trust has been on an unparalleled journey in the pensions world, going from a very challenging position to achieving the highest level of security for its members under difficult market conditions, and while still controlling risks tightly.
“This has been achieved by making the right investment in governance, by setting up a clearly defined objective to drive decision-making, and by all the stakeholders working together closely to achieve that objective.”
The momentum in the derisking market is seemingly unstoppable with the second-biggest transaction taking place just a few months ago in June when Legal & General agreed a £4.6bn pension transfer deal with Rolls-Royce.
