Defined benefit (“DB”) scheme buyouts and wind-ups are known for being slow, often taking years to complete. But there are times when this is not an option.
This case study shows how an employer restructured in two months by insuring its DB scheme in just eight weeks, passing the scheme to an insurer to take on both the employer’s role and responsibilities as well as the insurer’s – demonstrating what can be achieved with the right expertise and clear direction.
Here’s how we approached it.
The challenge
Emap needed to buy out its DB scheme in just two months, a significant departure from the typical two-year-plus process. The urgency was driven by a need to improve the company’s attractiveness to prospective partners, as the scheme was viewed as a barrier.
We were engaged as the professional trustee and Rosemary Kennell led the other company/member trustees, who were happy for her to take on the job.
The solution
Some insurers could not quote in such a short time (under two months) and needed board approval for taking on the employer risk too – something not done before. We worked closely with our buyout advisers, lawyers, and scheme administrators, and achieved an “all risk buyout” – an approach where the insurer took on full employer responsibilities as well as insuring the benefits. This outcome was unprecedented at the time and required strong collaboration at every step. We benefited from the fact that the insurer was a new company and was prepared to be flexible.
There was some surprise from the Pensions Regulator at first, but after explaining what was happening, they understood, and there were subsequent all risk buyouts with other insurers, two of which we also completed.
The result
Emap had no further involvement after two months. We went on to complete the buyout in the normal way and wind up the scheme in two years. All member benefits were fully secured, and the process met regulatory requirements.
This case set a new benchmark for trustee-led DB scheme closures, showing that with the right people and process, even the tightest timelines can be met.
“This was a first-of-its-kind solution. The insurer stepping in as employer was unheard of at the time. We made it happen.” - Rosemary Kennell, Director, Pension Trustees
How we can help
This case shows the strength of our pension trustee services. With a proven record of delivering under pressure, and professionals like Rosemary Kennell bringing over 25 years of trustee experience in addition to many years in the pensions industry, we continue to support clients.
