Rank Group transfers pension scheme liabilities to Goldman Sachs subsidiary
Rank Group has concluded a deal to transfer its pension scheme liabilities to Rothesay Life, a wholly-owned subsidiary of Goldman Sachs.
The final salary scheme has around 19,000 members and a fund size of £700m, making the transfer the largest of its type to date.
The transaction was brokered by Mercer, which is also the actuarial and investment adviser to the scheme trustees.
The transfer will secure in full the accrued benefits for scheme members and will remove all the company's remaining financial risks and liabilities relating to the scheme - including the cost of continued improvements in longevity.
David Ellis, principal at Mercer and a consultant to the scheme trustees, commented: ‘Most other buyouts to date have involved a significant tail of risk for employers and trustees while members' benefit entitlements are fully worked out. It can take up to two years before the full burden of risks is passed on to the insurer, with the final price of the policy being uncertain until then. This will not be the case with Rank.’
Ellis added: ‘There is increasing buoyancy in this market, prompted by companies wanting to reduce the burden of uncertain cost increases from changing legislation, stock market volatility and increased life expectancy. We're expecting more transactions in the future.’
Phil Tranter, worldwide partner and head of longevity risk consulting at Mercer, commented: ‘The growing interest in managing pensions risk has created some innovative arrangements with insurance and investment companies, which can be tailored for specific schemes and their sponsoring employers. Both the Rank deal and last year's Emap buy-out show what can be done to offload risks completely but alternatives to insured buy-outs, such as longevity indices, swaps and bonds, are also on offer from over 12 providers.’