Case study

Vickers Group Pension Scheme buyout

In late 2016, we completed a £1.1 billion buyout with the Vickers Group Pension Scheme, part of the Rolls-Royce Group, covering over 11,000 members. This buyout is an excellent example of a long-term de-risking strategy paying off. The transaction demonstrated how we work with pension schemes at all stages of their journey, guiding them to more successful outcomes than may have initially been thought possible. It underlines that the objective of buyout is fully achievable even when markets appear volatile

A long standing relationship

The Rolls-Royce Group pension schemes are long standing clients of Legal & General Investment Management (LGIM) which today manages around £12 billion of assets for the company’s main Rolls-Royce UK Pension Fund.

Legal & General have supported the trustees over many years, starting in 2007 with a Liability Driven Investment mandate to de-risk the scheme which ultimately culminated in a full buyout with us in 2016. The relationship with LGIM as investment manager enabled us to provide certainty and greater efficiencies during the transition period to buyout.

Transition of assets

Through an innovative price-lock mechanism, we ensured an efficient transition of assets which enabled us to meet the trustees’ and company’s pricing and administrative objectives.

The transition to buyout occurred during a busy time as the company was overseeing a merger of its other UK defined benefit schemes. The efficiency and certainty that our transition strategy offered was helpful to the trustees and the company.

Enhancing member benefits

When the Trustees first began to consider their de-risking options, they were not certain that a full buyout would be achievable, but by working together we were able not only to achieve a full scheme buyout but also the Trustees were able to offer a level of benefit enhancement to members.

What does this transaction demonstrate?

  • This buyout is a great example of a long term de-risking strategy paying off.
  • These kinds of successes are the product of a carefully-executed plan, often implemented over many years.
  • Legal & General works with pension schemes at all stages of their journey to guide them to successful outcomes.
  • The objective of buyout is achievable even when markets are volatile.