I am very interested by this article – coming from M&G and talking of Aberdeen’s recent take on of the Stagecoach £1.25bn Pension Scheme
There is an interesting commentary on an asset manager that until recently was involved with an insurer (Aberdeen and Standard Life) by an insurer who we think of as an asset manager (M&G which was Prudential).
The M&G approach to a deal with pension trustees and members to adopt a with-profits approach and consequently is as close as an insurance company will get to the “run-on” deal of Aberdeen’s. I am so pleased that M&G is so complimentary of the Aberdeen approach. I fear there aren’t enough Aberdeen’s to go around nor such bold Trustees as those of Stagecoach.
Of course the deal only is only for staff who joined the Stagecoach DB scheme. There will be staff of that company who have no defined benefits from being in what is now the Aberdeen sponsored plan. I hope that Stagecoach will find a way to improve the rights of those in a DC plan. There are two ways of doing this, the first is increasing contributions and the second is moving to CDC. It will be interesting to see whether and if so how the mutuality between Aberdeen and Stagecoach will extend benefits to the two company’s current workforces.
Aberdeen is also currently operating DC benefits and announced in April that it would improve the contributions to its DC scheme for today’s staff.
The group’s annual results revealed that it reached an agreement with the trustee of its main DB pension plan to unlock the plan’s surplus for the benefit of both the company and DB plan members.
The agreement, which is one of the largest of its kind, is designed to enable Aberdeen’s DC contributions to be funded from the DB surplus, while largely maintaining the surplus and maintaining future optionality, such as an insurance buyout.
The group confirmed that DB members will benefit from enhanced pension entitlements and guardrails to ensure the continuing financial strength of the plan.
Aberdeen also said earlier in the year that the deal with staff also includes a modest increase to the target level of investment return, which is intended to “open up” the possibility for a broader range of investments, including private as well as public market assets.
In an article by Sophie Smith of Pension Age, Aberdeen said that
the agreement was made possible due to the plan’s strong long-term investment performance, delivered by Abrdn (Aberdeen) Investments’ pension solutions and liability aware investment teams.
Let us hope that bus drivers get the same treatment whether in the DB scheme or in a DC plan or both!
