Case study

Timing is everything in a €50m pension buyout

Pensions & benefits

How we helped our client to secure the pensioner liability of their scheme, but only when it made financial sense.

The background

The pension scheme was mature with a significant proportion of pensioner liabilities. It had run into some funding difficulties. The trustees wished to secure the pensioner liability but only when it made financial sense and improved the position of the remaining membership.

Our solution

LCP’s role as trustee advisor was to put a framework in place to allow the trustees to monitor market movements in real-time and to move quickly when favourable market conditions materialised. LCP played a key role in the successful delivery of the project through:

  • Strong project management – LCP acted as project manager throughout the project. All parties’ roles were clearly defined in advance. LCP as project manager ensured continued progress and trustees were provided with regular updates against the project plan
  • Knowing the market place – LCP used their knowledge of the market place to ensure the trustees and members benefited from the keenest possible terms from the insurers. Contracts were negotiated substantially in advance with the preferred provider allowing the trustees to strike once the price was right.
  • Use of technology – The use of market leading technology was a key driver in the successful completion of the project. Once key terms were agreed, the trustees were able to monitor on a daily basis the value of assets and the estimated annuity buyout cost online using
  • Completion and follow up – Once favourable market conditions presented themselves, LCP obtained a transactable price from the insurer, arranged for a matched investment strategy to be implemented immediately and completed the transaction with the Trustees within a period 48 hours. LCP continued to liaise with the insurer post transaction to ensure safe transfer of funds and a seamless and worry free outcome for the pensioners.

The results

The trustees availed of a short window and completed the transaction when asset values and annuity prices were favourable. The security of pensioner members was enhanced, the funding level of the remaining scheme was substantially improved, and the overall size and risk of the scheme was significantly reduced.

LCP Visualise allowed us to track the funding position of our Scheme on a daily basis with a view to buying out our pensioner liabilities. A process to choose our buy out partner was undertaken by LCP and this allowed us to act quickly and decisively once the markets moved in our favour. LCP were instrumental in achieving the best possible buy out price for our Scheme and were key to ensuring the timing of that decision was the most favourable for all parties.

Noel Wall Pension Scheme Trustee