TRW completes largest ever buyout with L&G

The TRW Pension Scheme has agreed a £2.5 billion partial buy-out with Legal & General Assurance Society (L&G) as part of a risk transfer project.

According to Mercer, the lead trustee advisor, this was the UK’s largest, and most complex, defined benefit pension scheme risk transfer project. The L&G buy-out covers 22,000 UK pensioners in payment.

Mercer has been the lead adviser (and in most cases was also the actuarial/investment adviser) on all four buy-out transactions involving a premium over £1 billion to have taken place in the UK to date.

The full UK risk transfer project, which was designed to remove the financial risk posed by TRW’s UK pension scheme, included a variety of pension risk management exercises, which ran concurrently, including a pension increase exchange (PIE), an enhanced transfer value exercise (ETV), winding up lump sums, and equalization of guaranteed minimum pensions (GMP) and a pensioner buy-out.

Mercer’s David Ellis, lead adviser on the transaction with L&G, said: “Mercer’s market-leading annuity broking and investment advisory capabilities ensured that the complex transaction was a success. The innovations employed here work for plans of all sizes and shows what can be achieved when companies and trustees use a combination of de-risking strategies.”