LCP advises on bulk annuity deal of just under £930m between Littlewoods Pensions Scheme and Rothesay Life

Rothesay Life, one of the UK’s largest pension insurers, has today announced that it has insured just under £930m of deferred and pensioner liabilities in the Littlewoods Pensions Scheme (the “Scheme”) through a bulk annuity transaction, which was completed in July 2020. This buy-in builds on the de-risking of the Scheme, following a £880m pensioner buy-in completed with Scottish Widows in 2018.

The Scheme had already benefited from a de-risked funding position on the back of the 2018 buy-in, having previously been an early mover to hedge its interest rate and inflation exposures. It was therefore in an ideal position to take advantage of attractive pricing opportunities caused in part by COVID-19.

With much of the process running during the lockdown, all teams were working remotely, and the transaction was agreed and secured amid volatile asset markets. Of particular importance to the Trustees was the valuable price lock negotiated, which acted to immunise the Scheme against further movement in market conditions.

LCP was appointed to advise the Trustees on the planning, structuring and negotiation of the buy-in transaction. ARC Pensions Law provided legal advice to the Trustees whilst Rothesay Life was advised by Gowlings WLG. The Trustees were also advised by Mercer as the Scheme Actuary and administrator and Willis Towers Watson as investment consultant.

Colin Thwaite, Chairman of the Trustees of the Littlewoods Pensions Scheme, said: “I am delighted that, through this transaction with Rothesay Life, we have further secured the pension benefits for all our members. Guaranteeing our pension obligations has been our long-term goal and it is a testament to the quality of our advisers and the longstanding support and collaboration with The Very Group and its shareholders that we could secure this transaction in the current market.”

David Stewart, Partner at LCP, said: “With deferred members making up 90% of the membership for this buy-in, this transaction shows that attractive pricing is available at scale, with the right market approach, for schemes with long-dated liabilities. We are delighted to have worked with the Trustees to secure this transaction, helping the Scheme to move quickly when it mattered in volatile markets, and to lock into a valuable price lock and an attractive deal. ”

Sammy Cooper-Smith, Head of Business Development at Rothesay Life, said: “The Trustees have been in close contact with the market place for a number of years, keeping us informed of progress on their de-risking journey. This has kept this scheme at the forefront of the market, which has enabled the Trustees to secure the benefits at an opportune time from a funding perspective. We are delighted to have been entrusted by the Trustees to provide the scheme benefits to over 6000 beneficiaries.”

Matt Johnson, Senior Director at Willis Towers Watson, said: “Over the past 14 years the Trustees have worked with Willis Towers Watson’s delegated investment team to earn the return on their assets needed, while carefully managing investment risk, to reach this point. We are very proud to have been part of the Littlewoods Pensions Scheme’s successful journey to date.”

Anna Rogers, Senior Partner at Arc Pensions Law, said: “This transaction was completed at speed in challenging circumstances, alongside innovative legal and actuarial work to optimise insurer pricing We are delighted to see the Trustees reach this point in securing members’ benefits, and proud to have helped them manage their liabilities in order to put this outcome within reach“.

Steve Jones, Scheme Actuary of the Littlewoods Pensions Scheme, Mercer, said: “The issues arising from the need to equalise benefits following the Lloyds (GMP) ruling were presenting an obstacle to the Scheme’s de-risking plans. The legal, administrative and actuarial challenges were significant. However, working with the Trustees and Arc Pensions Law, we developed an innovative approach that met the Trustees’ obligations and helped to enable this second transformative buy-in to proceed.”