I am amazed that people like Sammy at Rothesay see deals that do ordinary people good as bad news to me!
I am aware that many people are fed up that they did not do the deal for Stagecoach but the deal has been done with all parties including the regulator that this is in the member’s interest – isn’t that what’s meant to be the “thing”.
My naivety was obvious to this chap, who assumed I’d accept that all parties put members first.
Let’s ask ourselves how the insurance deals were justified by the actuaries and trustees who are supposed to be guided by the TAS 300 assessment that chart “value for money” for members as well as sponsors.
Here are the comments of Allen & Overy on the Stagecoach deal with Aberdeen to transfer the pension.
A&O Shearman acted for Stagecoach in an innovative risk transfer transaction, working collaboratively with the Trustees and Aberdeen. After an extensive process of considering endgame options for the Scheme, an agreement was reached whereby the Scheme will continue to “run on” with Aberdeen as the new sponsor.
The arrangement is expected to bring significant benefits to the Scheme’s 22,000 members with an initial uplift to all benefits and better inflation protection out of existing Scheme surplus. The arrangement will also offer the prospect of further pension increases for Scheme members in the future without compromising the long-term security for the Scheme.
“It has been exciting to work with Stagecoach on a risk transfer transaction which does break new ground…”
Commenting on the transaction, A&O Shearman partner and Head of UK Pensions, Neil Bowden said:
“It has been exciting to work with Stagecoach on a risk transfer transaction which does break new ground – delivering an “exit” for Stagecoach but facilitating a “run on” within the occupational pension scheme framework that both the Trustees and Aberdeen found attractive. The initial uplift to members benefits out of existing surplus is also an interesting feature compared to more traditional insurance transactions when any benefit augmentations can be a number of years later when the final buy-out takes place.” (Ed’s bold and colour)
It’s nice to think that an uplift to member’s pensions is “interesting” and that it’s something that traditional insurance transactions don’t provide on “buy in”. We hear a lot about fiduciary duty of trustees being towards the best interests of members, I hope that it is a duty we see more in practice than on the lips of trustees!