In this pensions de-risking update we look at the latest developments in buy-ins, buy-outs and longevity swaps, including: facts and figures for H1 2018.
I am Co-Head of LCP Trustee Consulting and a partner in LCP's Insurance De-risking practice, specialising in helping trustees and companies to understand, prepare for, and implement longevity hedging strategies through the use of buy-ins, buy-outs and longevity swaps.
I am also a Scheme Actuary for schemes with assets ranging from £40m to £1.5bn.
One of my key areas of focus is helping clients to incorporate longevity de-risking in a way that dovetails effectively with their funding and investment strategies. For larger schemes, this often involves an approach of staged de-risking, undertaking a series of buy-ins or longevity swaps over time as part of the scheme’s overall de-risking strategy (see ICI Pension Fund as an example). I help schemes to identify when the right time to hedge longevity risk is, what size of transaction could be supported, and to assess the “value-for-money” of any transaction relative to alternative de-risking actions. It is this passion for designing optimal risk reduction strategies that led me to develop the idea for our longevity risk-measurement tool, LCP LifeAnalytics.
As well as larger transactions, I have advised on a number of buy-ins for smaller schemes. I have particular experience in the structuring of more complex or innovative cases, for example collateralised buy-ins, or PPF+ buy-outs designed to maximise benefits for members of schemes in distress.
Example transactions include:
- 3i - £200m pensioner buy-in (2017)
- Confidential - £110m partial pensioner buy-in (2016)
- ICI - 9 x collateralised pensioner buy-ins totalling £7bn (2014 to 2016)
- MIRA - £70m PPF+ buy-out (2015)
- Northern Bank Pension Scheme - £680m collateralised pensioner buy-in (2015)
- First Quench - £160m PPF+ buy-out (2013)
- Uniq - £830m PPF+ buy-out (2011)
- GSK - £900m collateralised pensioner buy-in (2010)
- Aggregate industries - £300m pensioner buy-in (2010)
- West ferry printers - £100m pensioner buy-in (2008)
Thank you for the professional way in which you steered us through this complex project. Your advice was robust and clearly communicated, helping us to achieve an excellent outcome for our scheme and its members. As I have said a number of times, I wouldn’t expect anything less from LCP!
In this video, Michelle Wright looks at the importance of understanding how much longevity risk your pension scheme is running.
LCP’s ‘Making Sense of Longevity Trends’ report - released today (Monday 27 November) - found that 60% of pension scheme trustees and sponsors believe that the recent slowdown in longevity improvements is now the new norm.27 November 2017
LCP’s latest modelling technology, LCP LifeAnalytics, has been used by the Invensys Pension Scheme and the ICI Pension Fund to help them better understand the longevity risk they are running.2 August 2016
The Trustee of the MIRA Retirement Benefits Scheme (MIRARBS) has used its share of the proceeds of the business sale of MIRA Ltd to secure members’ benefits at a level in excess of Pension Protection Fund (PPF) compensation via a £70m buy-out transaction with Pension Insurance Corporation (PIC), a specialist insurer of defined benefit pension funds.28 July 2015
How I have helped our clients
How we helped one of the largest DB pension plans in the UK, ICI Pension Fund, progressively insure their longevity risk using innovative umbrella contracts
How we helped Northern Bank to address longevity risk with a £680m collateralised pensioner buy-in
Our 2018 report on the buy-in, buy-out and longevity swap market comes at a time when pension de-risking is more exciting than ever.
LCP longevity report. Making sense of longevity trends - we delve into the factors behind the changes in life expectancy and how this is impacting defined benefit pension schemes.
Our unique tool, LCP LifeAnalytics, measures how much longevity risk you are running in your pension scheme.
How I can help
We provide individual and high quality actuarial advice, taking a collaborative approach between trustees, employer and advisers, to ensure a focus on good member outcomes.Meet some of our experts
We are market leaders at each stage of de-risking, including planning, investment strategy, transactional services and wind up.Meet some of our experts
LCP LifeAnalytics is a unique tool that allows you to measure the longevity risk in your pension scheme.Meet some of our experts