A record-breaking £4.8 billion full scheme buy-in

In November, we completed the UK’s largest full buy-in by premium size with the Boots Pension Scheme, securing a total of £4.8 billion of liabilities. All 53,000 members were insured, making it our largest ever single transaction by number of members. The complexities associated with a transaction of such size required collaboration across all parties and innovative solutions to meet the Trustee’s and Sponsor’s objectives.

Collaboration was the key to success

We have a long-standing relationship with the Trustee and Sponsor having provided investment management services to the Scheme for over 20 years. Following a competitive process, we were selected to partner further with them and ultimately complete the de-risking journey for the Scheme. The Trustee was able to provide added
long-term protection to its members’ benefits by removing market uncertainty and other pension scheme risks. In addition, the Sponsor was able to create certainty over its future commitments to the Scheme.

To capture the opportunity for the Scheme all parties had to work very closely together. This was particularly important given the Scheme had a significant portfolio of illiquid assets including property, private credit and infrastructure investments. We worked with the Trustee, Sponsor and their respective advisors to develop a series of innovative solutions that provided both certainty of price and certainty of execution within the required timeframe.

Providing flexibility through innovation

To support the Trustee and Sponsor in using the illiquid assets in the most efficient way, we provided flexibility through a combination of solutions that included:

  • Taking responsibility for the sale of some of the assets (whilst they were warehoused on the Scheme’s balance sheet).
  • Accepting some of the assets in-specie to hold long-term in our annuity portfolio.
  • Providing a deferred premium while the Scheme sold some of the assets themselves.
  • Providing a backstop, meaning that if after a short time the Scheme had been unable to sell the asset, we would take on responsibility for the sale.

This transaction represents another innovative step forward in pension scheme de-risking by providing a combined investment and insurance solution for the Scheme's asset holdings, allowing the Trustee and Sponsor to achieve the certainty of a transaction whilst
also maximising value by transferring its assets (or the associated sale proceeds) to us.