Engine manufacturer Rolls-Royce’s defined benefit (DB) pension scheme has completed a £4.3bn buy-in with Pension Insurance Corporation (PIC).
The transaction means the DB scheme – one of the largest private sector schemes in the UK – is now fully insured, following a £4.6bn buy-in with Legal & General completed in 2019.
The deal has insured the pensions of 36,000 former Rolls-Royce workers, including 15,000 pensioners and 21,000 deferred members. It is the largest buy-in deal announced this year and one of the biggest single transactions completed by a UK pension scheme.
According to a press release announcing the transaction, the Rolls-Royce pension scheme trustees were particularly focused on customer service when selecting an insurer.
Liz Airey, chair of trustees for the Rolls-Royce UK Pension Fund, said: “We have invested significant time and effort over a number of years to provide our members with exceptional customer service. It was critical for us that we selected an insurer to secure our members’ pensions that is able to continue this.
“We are really delighted that PIC, which has a long track record of excellence in customer service, brought us such a strong proposition. We feel our members are in safe hands.”
Michelle Wright, partner at LCP and lead adviser on the transaction, added: “This ground-breaking transaction epitomises what it means to put pension scheme members at the heart of decision making. From start to finish, we have been guided by the trustees’ clear ‘member-first’ principles, which have significantly raised the bar for member-centric insurance solutions.
“We are delighted to have been part of such an innovative, landmark transaction, which paves the way for other large pension schemes seeking a best-in-class solution for their members.”
Helen McCabe, chief financial officer at Rolls-Royce, added: “This is a win-win for all our stakeholders. We are proud to have been able to fully fund and secure the pension promises made to colleagues, former colleagues and their families. This deal is also another step on our journey towards simplifying Rolls-Royce.”
Mitul Magudia, chief origination officer at PIC, said the insurer’s recently announced acquisition by Athora would give PIC a “strong appetite to complete many more ground-breaking transactions like this in the future”.
Athora, a European insurance giant with businesses in Belgium, Germany, Italy and the Netherlands, is to acquire PIC in a deal valued at £5.7bn. This is subject to shareholder and regulatory approval.
