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26 March 2014

LCP advises
ICI Pension Fund on largest UK bulk annuity policy

LCP was appointed as specialist adviser to the ICI Pension Fund and ran a dedicated tender and execution process that was completed within 6 months.

The liabilities covered by the buy-in policies are subsets of the Fund’s pensioner population.  LCP advised on the most appropriate selection to secure with each insurer in order to optimise the balance between risk reduction and economic value for the Fund. Members will see no change to the way their pensions are paid, or the way in which the pension fund is administered.

Clive Wellsteed, Partner at LCP and lead adviser to the Trustee said: “At £3.6bn, these landmark transactions are the largest of their kind to date, with the Fund using its scale to negotiate competitive terms, reduce risk and enhance member security. It demonstrates the appetite of mature final salary schemes to de-risk their pensioner liabilities and shows how transactions can be successfully structured at a scale not previously seen.”

David Gee, Chairman of Trustees for the ICI Pension Fund, said: “I’m delighted that the Trustee has achieved such a significant step in its strategy to further reduce risk in the Fund. Members can be reassured that this will improve the security of their benefits by substantially reducing longevity risk for the Fund.”

Heath Mottram, CEO of the ICI Pension Fund, said “Investment in these buy-in policies builds on the Fund’s strong de-risking foundations. The transactions are the result of significant work by the Trustee over the last six months including a thorough selection process and negotiation of competitive pricing and terms.”