T H WHITE: £25m buy-out and wind-up with surplus
Pensions & benefits Pension risk transfer
We helped T H WHITE secure members’ pensions in full and ultimately wind-up their DB scheme with surplus refunded to support the company's future growth
The background
T H WHITE had a clear long-term objective to secure pensions for their employees, while eliminating the financial risk and funding commitments inherent with running a £25m DB scheme. In 2009 the scheme was around 50% funded on a buyout basis and had a recovery plan stretching to 2019 - they were expecting a long journey.
Our solution
Investment strategy
We first started working with T H WHITE in 2007, when we were appointed as investment advisers. We quickly implemented investment strategy changes to reduce pension scheme risk but maintain expected return.
Getting the data right
We were appointed as scheme actuary and pension administrators in 2011. In this role a key project was to help the trustees resolve legacy legal and data issues. This meant that when the time came to approach buy-in insurers, the Scheme’s data was in excellent shape.
Seizing opportunities for buy-out
In 2015 the Trustees were able to react quickly to the favourable buy-in opportunities highlighted by LCP. Using LCP’s streamlined buy-in service they were able to meet their objectives of certainty on fees, competitive pricing and completing the buy-in quickly.
Our pro-active investment advice helped T H WHITE to further de-risk and lock in improvements in their solvency position. Acting on advice from us to hedge against falls in interest rates had really paid off, and once full buyout was within reach the Scheme also closed out its remaining equity investments when the FTSE was near record highs. The equity investments had delivered the good returns the scheme needed so it was the right time to sell.
The earlier data rectification project also helped speed up the buy-in process and convinced insurers that the Scheme was keen to transact. This helped them to achieve a great price and the buy-in cost was met entirely from the Scheme’s assets. This meant that the remaining payments due under the recovery plan were no longer required and the surplus assets of £0.4m were refunded to the employer.
Project management through to wind-up
Our support continued right to the end, project managing the wind-up of the Scheme within nine months of signing the buy-in contract.
The results
By the end of 2015 they had fully removed all the liabilities from their defined benefit pension scheme. This led to the wind-up of the Scheme in 2016, and a £0.4m surplus that was refunded to the company. Pensions for current and former employees are now fully secured and the significant cash flows that were earmarked for the Scheme’s recovery plan are instead available to develop and grow the business.
By taking quick decisions and seizing opportunities to lock in gains, T H WHITE achieved their objectives much sooner, and with much lower company contributions, than originally expected.
