How a collaborative approach led to a £855m full buy-out for the PA Consulting Pension Scheme.

Case studies

The background

Longevity risk had been identified as a key unhedged risk for the Scheme and LCP had advised the Trustee on a comprehensive “buy-in readiness” project, including data cleansing and drafting benefit specifications, in anticipation of approaching the market for pensioner buy-in pricing. Improved insurer pricing in late 2017 meant the focus shifted from a pensioner buy-in to a full buy-out – the work undertaken on the buy-in readiness project meant the Trustee was well prepared and able to react quickly to a Company proposal to investigate a full buy-out.

Our solution

As well as the extensive preparatory work, the buy-out project was combined with two member option exercises. The Scheme ran a Pension Increase Exchange and Enhanced Transfer Value (ETV) exercise as part of the wider project. This helped improve the economics of the buyout and make it affordable. The innovative structuring of the ETV exercise meant the Scheme benefitted from absolute price certainty whilst continuing to run the exercise after the buy-out was signed.

The results

The Trustee successfully completed the full buy-out with PIC in June 2018 with the final result meeting both the Trustee and Company objectives set at the start of the project. It’s another example of how important a collaborative approach amongst all stakeholders can be in achieving a great outcome for all parties.

Working with us

Be prepared so you are able to react quickly to opportunities. Undertaking data cleansing and benefit specification preparation work puts you in a great position to capture pricing opportunities and to maximise insurer engagement when you do approach the market – standing out as a well prepared pension plan is increasingly important as demand steps up in the buy-in and buy-out market.

How we can help

We are market leaders at each stage of de-risking, including planning, investment strategy, transactional services and wind up.

We help pension scheme trustees and sponsors to determine the ultimate destination for their scheme and help them put together a plan to get there, including how to effectively manage the risks they face along the way.

We help you identify and implement strategies that will help you achieve your objectives

We help companies manage and mitigate their pensions risks and costs.

We support trustees and employers through the complex process of winding up a scheme.