Legal & General Group Plc (“Legal & General”) today announced it has completed a £1.1 billion pension buyout for the Vickers Group Pension Scheme – part of the Rolls-Royce Group – covering over 11,000 members. This is the largest pension risk transfer transaction in 2016.

14 November 2016

The Rolls-Royce Group pension schemes are long standing clients of Legal & General Investment Management (LGIM) which manages around £12 billion of assets on the schemes’ behalf. LGIM have supported the Rolls-Royce pension schemes throughout their de-risking journey and the buyout announced today saw the culmination of the Vickers scheme’s journey as it achieved its goal of full buyout.

Working in partnership with the Scheme and its advisors at Mercer, Legal & General provided a smooth transition and the price certainty that the trustees required. Through an innovative price-lock mechanism and an efficient transition of assets, Legal & General ensured the trustees’ and the company’s objectives were met. This was made possible by virtue of the assets being managed by LGIM and the approach the trustees have taken in de-risking their asset portfolio to date.

The end result was that the Scheme has been able to achieve a full buyout. This is a fantastic result in a period that has seen challenging news for pensions and members in general and a change to the insurance regulatory regime through the introduction of Solvency II.

Phill Beach, Head of Core Pension Risk Transfer at Legal & General, commented: “We are delighted that the Vickers trustees chose to work with Legal & General and ultimately secured their members’ benefits with us. We were pleased to work with Rolls-Royce, the Vickers scheme and their advisers on what proved to be a very smooth transition. The relationship with LGIM as investment manager enabled us to be innovative in offering certainty to the Scheme during the transition period and this proved to be beneficial to everyone against the backdrop of volatile markets. This is a significant transaction which demonstrates that with strong company backing and a trustee who manages risk well the objective of buyout is fully achievable even when markets appear volatile.”

Kerrigan Procter, Managing Director of Legal & General Retirement, said: “We look forward to welcoming the 11,000 members of the Vickers Group Pension Scheme to Legal & General. We are pleased to have worked closely with the Scheme trustees, their advisers Mercer, and Rolls-Royce Group to achieve a full buyout. Our relationship with the trustees has been a long-standing one, starting in 2007 with an LDI mandate to de-risk the Scheme and now culminating in a full buyout. We are grateful for being able to play a part as the trustees, with patient and careful management, steered their way through the financial crisis, recession, the consequences of QE and latterly the outcome of the EU referendum before reaching the point where buyout was appropriate and achievable for all Scheme members.”

Joel Griffin Head of Pensions at Rolls-Royce, said: “This is a great testimony to the work of the Trustees, their advisers and the Company who have worked collaboratively over many years to ensure that this scheme is well funded with a prudent investment strategy.  This has ultimately enabled us to deliver this excellent outcome for former Vickers employees.” 

David Ellis, trustee adviser and Mercer UK leader, Bulk Pensions Insurance Advisory, said: “Mercer is delighted to have helped the Trustee complete this major transaction, despite seemingly harsh financial conditions. It is a great demonstration of the excellent results that can be achieved by taking a holistic view of pension scheme risk and having the confidence to push for the full desired outcome.”

For further information (journalists only), please contact:

Richard King, Head of Corporate Communications                                                                     

Legal & General                                                                                    

07515 324 001                                                  

richard.king@group.landg.com                                             

Background on Legal & General

The Legal & General Group, established in 1836, is one of the UK’s leading financial services companies. As at 31 December 2015, the total value of assets across the group was £746.1 billion, including derivative assets. We also had over nine million customers in the UK for our life assurance, pensions, investments and general insurance plans.

Legal & General has been an active participant in the insurance solution pension de-risking market for nearly 30 years and was named the best de-risking provider at the Financial Times’ Pension and Investment Provider Awards 2015 and the Engaged Investor Trustee Awards 2015.

Legal & General offers a range of de-risking solutions, which includes buyout, buy-in, longevity insurance and liability-driven investment (LDI), to pension schemes of all sizes. Legal & General has expertise in investment management, all aspects of defined benefit provision as well as an in-depth understanding of mortality trends and longevity risk. Corporates, trustees or advisers looking for further information on the pension scheme insurance de-risking solutions available from Legal & General should call the Pension Risk Transfer team on 020 3128 1149.         

The information contained in this release is intended solely for journalists and should not be used by consumers to make financial decisions.

Legal & General Assurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Legal & General Assurance Society Limited. Registered address: One Coleman Street, London EC2R 5AA. Registered in England No 166055