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10 April 2019

LCP advises on QinetiQ
pension scheme buy-in with Scottish Widows

QinetiQ Group PLC (QinetiQ or the Group) today announced that the QinetiQ Pension Scheme (the Scheme) has completed its first bulk annuity insurance buy-in for approximately £690m.

Scottish Widows were selected for the buy-in following a competitive process. The agreement covers approximately 33% of the Scheme’s liabilities. The buy-in removes longevity, interest rate, and inflation risk for a proportion of the Scheme and is in line with the Group’s strategy of de-risking the pension liabilities.

LCP acted as lead adviser on the transaction. Legal advice was provided to the Scheme by Gowling WLG and to Scottish Widows by CMS.

David Stewart, partner in LCP’s de-risking practice and lead adviser, commented:
“We were delighted to be appointed by the Trustee as a specialist de-risking adviser to complete one of the largest CPI-linked buy-ins to date. We established an ‘umbrella’ contract structure following the model we successfully developed for ICI, Pearson and M&S. This provides a quick and efficient platform to enable future buy-ins as attractive CPI-pricing becomes available.”

Huw Evans of BESTrustees, Chairman of the Scheme, commented: “This buy-in improves the risk profile and investment efficiency of the Scheme for all members and represents a significant step towards securing the benefits promised. The Trustees are grateful to their advisers and to the Company and its advisers all of whom worked seamlessly together to ensure that the transaction followed an effective and efficient process.”

Matt Wilmington, Head of Bulk Annuity Origination at Scottish Widows, commented: “We are delighted that the Trustees have chosen Scottish Widows as a partner in their ongoing de-risking plan. Working collaboratively with LCP, Gowling WLG, CMS and the Trustees, the efficient process allowed us to complete the buy-in contract and asset transfer in less than four weeks of being selected as the Trustees' preferred provider.”