Telent pension scheme completes record £4.7bn buyout

Telent and the trustees of its GEC 1972 defined benefit pension scheme have completed a full buyout with Rothesay Life worth a record £4.7bn.

The deal secured the benefits of all 39,000 members, including 11,000 deferred members, and consists of two parts as the buyout will be preceded by a buy-in.

The buy-in will see the transfer of assets from the scheme to Rothesay Life in exchange for an insurance policy which will provide the funds for the scheme’s current administrator to continue paying members’ benefits in full.

The buyout is expected to be completed before the end of 2022 and will see members receive individual pension contracts or annuities with Rothesay Life who will at that time take responsibility for paying members their benefits.

It will be the largest full scheme buyout concluded in the UK, with the second largest being the Rolls-Royce buyout deal with Legal & General that was completed in June 2019 for £4.6bn.

Commenting on the announcement, Telent CFO, Heather Green, said: “The trustee of the GEC1972 Plan has done a fantastic job to eliminate the significant funding deficit that existed in the plan only 10 years ago and get the scheme to a position where it can benefit from the hugely more secure future that this transaction provides. It is great news for all members of the scheme.

“For Telent, being the sponsor of a scheme many times larger than our business was not ideal. We can now look forward to focusing more of our investment in our already successful technology solutions business.”

Aon was the lead adviser to telecommunications firm Telent in the deal, while Redington also advised the firm through its corporate trustee, the Stanhope Pension Trust.

Aon senior partner and head of risk settlement, Martin Bird, stated: “We are extremely pleased to have supported the trustees and Telent in achieving such a positive outcome for members.

“2019 has been the busiest year on record for bulk annuities and the ability to stand out from the crowd continues to be the key component of capturing the best insurance pricing and terms.

“In this case, exemplary governance arrangements combined with a flexible and nimble project group proved invaluable in delivering such a successful outcome.”

Redinton director and lead investment consultant for Stanhope Pension Trust, Mette Hansen, added: “Over the past 10 years, the Stanhope Pension Trust has been on an unparalleled journey in the pensions world, going from a very challenging position to achieving the highest level of security for its members under difficult market conditions and while still controlling risks tightly.

"This has been achieved by making the right investment in governance, by setting up a clearly defined objective to drive decision-making, and by all the stakeholders working together closely to achieve that objective."

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