The j0urney for those in the far north – this endgame?
I wanted this morning to explain a discussion that’s going on between experts about what has gone on between Stagecoach and Aberdeen over the Stagecoach pension trust. I couldn’t do that without explaining to a lot of people who think of pensions as saving for a pot, how pensions and annuities differ and how some pensions are guaranteed by employers, a few by capital and one that’s promised but not guaranteed by members.
If you don’t get what I’m talking about, here is the link to the blog that was published earlier this morning. It’s a run thorugh of the different ways of being paid an income for life when you start getting old!
What follows is for the kind of experts who want to understand things through Edi Truell, Derek Scott and Pensions Oldie (real name withheld).
First let’s hear from Bob Compton
He asks whether the Stagecoach/Aberdeen deal changes the decisions trustees have to take before buying out or running on. Should the question of running on be broadened on to “who with”.
I am not aware of the full details of this deal, but it seems to be a win for the members, for Aberdeen Group, and for the Trustees for have fought hard for their members. It should be applauded. The only losers appear to be the buy out providers who have failed to add £1.2bn to their 2025 deal tally.
Independent Trustees will need to study how this deal was achieved, and look at TAS 300 reports in a new light, as this could be a potential game changer.
“Jnamdoc” speaks with a degree of authority on the Stagecoach/Aberdeen situation to Bob Compton
Agreed, if the Trustees of this scheme can get their bus driver members the lion’s share of run-on surplus, this puts the (fiduciary) pressure on all independent trustees to follow suit, or at least to do the maths and ask the question! Expect the FRC to show its teeth, so ignore TAS300 obligations at your peril.
For well funded schemes, the danger to members moves away from covenant, and it is inflation that will kill most pensions, and so that is where Trustees should turn their fiduciary duties to.
This example of run on looks like it will support growth, and provides inflation protection over members’ pensions.
Pension Oldie philosophises
Perth is north of London but south of Aberdeen, his argument is that Stagecoach (based in Perth) should be able to do a deal with Aberdeen without a lot of fuss and bother about how to get from one to another.
This is a philosophical matter.
Insurers sell on risks and actuaries are trained on considering and measuring risks.
Unless an insurer, a business must set its direction on the opportunities available to it. While a business does have to consider risks it must still strive to reach the destination it aspires to.
So if your destination is Aberdeen and flooding closes the A90 you do not change your destination – even if sometimes your best route is temporarily changed to the A93 via Braemar. The benefits of reaching the destination more than offset the extra costs and time required.
Is the same not true of a Pension Scheme?
It is a great shame that the Government has been lobbied by the insurance industry to set directions based on a belief that Aberdeen is all but unreachable and that the only way of getting there is via the A9 and inverness and the time and cost has to reflect that journey.
Edi Truell accepts his CBJP came second best this time
A fabulous deal for pensioners! Great credit to John Hamilton. First by investing in equities and productive assets and tripling the pension fund assets over the years ( against the assorted array of regulators and LDI high priests). Then by steering patiently and creatively away from buyout to produce a deal where pensioners receive the lions share of the surplus. Disappointed of course not to have been the sponsor… but WELL DONE John.
Pension Oldie points out that he has as a Trustee thought of doing what Stagecoach Trustees have just done.
As an independent chair of trustees when discussing the 2018 valuation which showed the scheme in surplus under technical provisions for the first time (for at least 20 years / ? ever), I surprised the Board of the sponsoring employer by saying that looking forward if the employer’s covenant or commitment to a fully open DB scheme weakened the pension scheme would look for a new employer.
At the time I had no instances I could refer to. The transfer of sponsorship from Stagecoach to Aberdeen now provides a clear precedent example.
To me Stagecoach appears to be the loser as they no longer have an interest in the investment performance of the scheme or the asset that has been built up.
However their commitment to Aberdeen in respect of current employees is no different and in the long run likely to be less onerous than that of an employer contributing to a DC arrangement; and retaining the recruitment and retention benefits of offering a “gold plated” DB pension promise.
In 2018 the nearest example I could think of was the Pensions Superfund (promoted by Edmund Truell and Henry Tapper). I deeply regret that type of option is not currently available particularly for smaller employers to whom the legislatively bloated bureaucracy and administrative costs of running on your own scheme places an excessive burden on the employer…
The same Edi Truell in Oldie’s comment replies
Thank you for the reference. Pension SuperFund was an explicitly capital backed to an v high level of safety, and explicitly ‘shared outcomes’ model.
Investors made a return on their capital backing… but only if members also received a ‘Christmas bonus’ at the same time.
Sadly TPR/DWP/Treasury would not stand up to the relentless lobbying of the ABI and an ideological faction that to this day cannot recognise that a single covenant is always more risky than a pooled financial covenant, nor that in the long term, bonds are always producing worse outcomes than equities and productive assets.
Derek Scott- retired Chair of Trustees of Stagecoach opines on precedent for the Stagecoach/Aberdeen transfer (and what happened next).
Some are suggesting the earlier transfer of the GEC Marconi DB scheme(s) to “telent” (let’s call it Telent from now on) was a precedent in 2006/07.
No doubt Ed Truell will be familiar with this example!
In November 2007, Telent, which had inherited GEC’s £2.5bn pension scheme(s) with several tens of thousands of members, was being purchased by Pension Insurance Corporation for £400m; the following month its shares were delisted and Telent became a private company.
In letters to the 60,000 members of the scheme and TPR, chairman of the trustees Chris Holden (whom I had known at Arthur Andersen) said the trustees were not told of the offer by the buyout firm’s subsidiary – Co-Investment No.5 LP Incorporated (CILP) – or of any plans for the pension scheme.
The Pensions Regulator (TPR) intervened by appointing three independent trustees to the pension scheme due to concerns raised by the existing trustees, prompting PIC to seek a one-week extension on their takeover bid to evaluate options and address TPR’s involvement, aiming to protect scheme members’ futures amidst potential takeover complexities.
TPR’s report at the time is available athttp://www.thepensionsregulator.gov.uk/media/olbltwfz/section-89-report-telent.pdf
From 2008 Telent made various business acquisitions, including intelligent traffic systems group TSEU, communications infrastructure provider, the Alan Campbell Group, and telecoms service provider, Premises Networks.
In September 2019, the pension scheme, described by Telent as a “disproportionately large liability”, was bought out by Rothesay Life in a £4.7bn deal.
This precedent brings Edi Truell back to the commentary
Fake news. We had had six months of meetings with Telent and the tPR beforehand.
Bottom line : 69,000 pensioners received full, inflation linked pensions. About 5,000 exercised pension freedoms over the 12 years.
From a pension fund that was fully funded at the time of the corporate take private, but due to the inept oversight of the tPR-appointed trustees, then lost about £700m in the next 9 months.
Brilliant job by the new trustee board, in collaboration with Pension Corp and the company, to recover all of that and then make more steady returns.
In conclusion
Reading through this correspondence it becomes clear to me that the end-game which is endlessly discussed in pension conferences and the trade press is ignoring what is happening and has happened.
I hope that the correspondence brought together in this blog will help experts understand the context of Stagecoach’s , Aberdeen’s and Stagecoach’s trustees discussions and decision.
Early on TAS 300 was mentioned, it is the value for money tool for trustees and their advisers to make decisions for members and for the sponsors too.
It cannot ignore Stagecoach/Aberdeen and TAS 300 reports must be aware of the history that lies behind what happened in December 2025 and the months that preceded that on the road between Perth and Aberdeen.
This cartoon is an extraordinary description of what has happened though I think the bus should be relishing the prospect of Aberdeen not buy-out!
An easier journey if this bus can turn itself around!
Thank you Henry for this most helpful post. My only question is why does everyone seem to think it’s a good deal for the members. Is there anything written down to make sure this happens or is it just “vibes”. Is there more than the Trustees’ fiduciary responsibilities? Because I’ve seen enough examples where this doesn’t work for the members.
I’m grateful to Ed for identifying the “fake news” about GEC-Marconi, which I’d taken from Professional
Pensions at the time and the subsequent TPR “section 89” report.
I’ve been around the block myself enough times to know that the stories reported in the press or in “official” reports are not necessarily how those stories seem
to be from the inside looking out.
I commend the updated Anthology series of nine about the Beatles on Disney Plus. McCartney says at one point that so much has been written about the Beatles by outsiders looking in, so it’s good to hear a little from them about how it was looking from the inside to the madness outside.
But, like Bryn, I wish in pensions we could hear from members too, which we never seem to do. It’s always the self-congratulatory tones of the consultants and the insurers we read in their press releases and LinkedIn posts.
Stretching my Beatles analogy one last time, wouldn’t it be great to hear from members “now and then”, how does it feel to be one of the beautiful people inside a pension scheme being bought out or run on or transferred to the PPF?
Both now and again, sometime further down the long and winding road of their futures …
There is an article on Mallowstreet which contains this comment
A Unite spokesperson said: “This is a positive development which will be good news for our members who remain in the scheme. Unite’s trustees have been fully involved and are fully supportive of this announcement.”