Rothesay Life completed a £2.8bn pensioner buy-in with National Grid UK Pension Scheme in respect of c.8,000 members of Section A.
National Grid UK Pension Scheme is the largest pension fund to buy an annuity to enhance security for their members.
The process of securing the pensioner buy-in, from the point the scheme approached the market to completion of the bulk annuity was a total of 3 months. This demonstrates our ability to react quickly and allow schemes to benefit from favourable pricing and market conditions.
BACKGROUND AND THE TRANSACTION
The National Grid UK Pension Scheme is a UK defined benefit pension scheme and has assets and liabilities of around £20 billion.
This transaction was the first insurance solution used by the Scheme to help reduce its risk exposure.
Our ability to offer a highly bespoke price lock portfolio of assets linked to a subset of the Scheme’s asset holdings with minimal caveats gave the Scheme additional security in a volatile market. The Scheme was able to pay the premium by simply transferring this portfolio to Rothesay Life.
The contract in place will allow the Trustee to secure further tranches of beneficiaries on the same contractual terms allowing the Scheme complete future transactions very quickly and potentially take advantage of favourable market conditions.
Our sophisticated risk management systems allowed us to provide economic certainty to the Trustees ahead of transacting despite volatile market conditions (Brexit, US/China trade war, changes to RPI gilts).
The transaction reduced the Scheme’s exposure to longevity risks as well as financial risks such as interest rate and inflation changes, providing protection of the funding position of the Scheme