£250m wind up in record time

The company had the objective of getting the scheme off its books by its financial year-end

Strong project management and specialist advice was key to helping our client wind-up their pension scheme in record time.

The background

The trustees of a £250m defined benefit pension scheme agreed to enter into a buy-in contract with an insurance company and then to move towards the full buy-out and wind-up of the scheme in return for significant additional funding from the sponsor which enabled benefits to be secured in full.

A key condition of the additional funding was to remove the scheme from the sponsor’s balance sheet by its financial year-end.

To achieve this, an exercise needed to be undertaken to close the scheme to the future accrual of benefits and ultimately secure members’ benefits with an insurer in their own names under a challenging timescale of a little over six months.

Our solution

LCP’s role as existing trustee advisers was extended to managing the move to buy-out and wind-up and to ensure that the tight timescale was met.

We played a key role in ensuring the successful completion of this project through:

• Strong project management - LCP acted as a specialist project manager working alongside incumbent actuarial and other advisers to coordinate the completion of tasks – drafting a detailed project plan at the outset, driving forward progress and providing regular updates to the company and its advisers, as well as the trustees and their other advisers
• Supplementing existing resources - existing scheme resources were stretched to deliver within the required timescales so LCP stepped in and supported the existing team, where needed, including at their offices
• Providing specialist advice - LCP drew on in-house expertise in a number of areas such as GMP reconciliation and equalisation, and pensions tax
• Providing innovative solutions - for example, the scheme had a number of individual annuity policies which needed to be restructured and assigned to members prior to wind-up. LCP worked closely with the insurers to design an innovative solution
• Controlling costs - by obtaining and monitoring budgets from all key advisers involved in the process, and putting forward and working to a fixed fee for LCP’s services, we were able to meet the company’s objective of carefully managing the costs of the wind-up and the 'top-up' contribution it had to pay

The results

All parties worked closely together to ensure that a significant number of tasks were completed in a very short timeframe.

This meant that the wind-up process was completed in record time and the company attained its objective of getting the scheme off its books by its financial year-end.